The Bulls Keep The Pace for Fixed Income Yields For A Second Consecutive Day

Proshare

Wednesday, June 03, 2020 / 8:18 AM / By Zedcrest Capital / Header Image Credit: CNBC


Proshare Nigeria Pvt. Ltd.


Below are highlights of trading activities in the fixed income and forex market on June 02, 2020 


FGN Bonds

Yields continued to depress in the FGN bond market as the bulls continue to drive yields for the on-the-run bonds. We noted particular interest in the short- (2021s), mid- (2025s), and long-end (2050s) of the bond curve from local investors. Consequently, yields dropped by an average of c.2bps D/D across the benchmark curve.

With the market supported with robust system liquidity, we expect investor demand to persist in the interim.

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

14.50 15-Jul-21

6.89

4.26

(0.10)

 

16.39 27-Jan-22

7.80

5.44

(0.01)

 

12.75 27-Apr-23

9.13

8.39

(0.01)

 

14.20 14-Mar-24

9.09

8.37

(0.06)

 

13.53 23-Mar-25

8.61

7.48

(0.11)

 

12.50 22-Jan-26

10.12

8.83

(0.05)

 

16.29 17-Mar-27

11.05

10.07

0.05

 

13.98 23-Feb-28

11.03

10.35

0.00

 

14.55 26-Apr-29

11.13

10.47

0.08

 

12.15 18-Jul-34

11.35

11.15

0.00

 

12.40 18-Mar-36

11.36

11.04

0.00

 

16.2499 18-Apr-37

11.34

11.14

(0.05)

 

14.80 26-Apr-49

12.48

12.20

0.00

 

 

Treasury Bills

The OMO bills market was less active compared to yesterday's trading session, despite a liquidly buoyant market. We observed continued demands for short- to mid-dated maturities, although the offers seemed relatively low on those bills, pushing rates at that head of the curve down by an average of c.101bps. The longer-dated maturities remained well offered but will little to no demand interests on those papers. Consequently, yields compressed by an average of c.50bps across the benchmark OMO curve.

The NTB market also saw an uptick in activity, especially the 13-May-2021 paper which traded around 3.40% levels. Other papers requested for where mostly mid-dated bills, but with poor supply there very little trades crossed.

We expect that the buoyant system liquidity will continue to support market demand, thus further depressing yields in the treasury bills space.


Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOM 6/4/2020

3.00

0.10

(1.00)

NGOM 7/2/2020

5.00

1.50

(2.04)

NGOM 8/13/2020

6.00

1.50

(0.50)

NGOM 9/3/2020

6.00

1.50

(1.00)

NGOM 10/1/2020

7.00

1.50

0.00

NGOM 11/03/2020

7.00

1.50

0.00

NGOM 12/01/2020

8.00

1.50

0.00

NGOM 01/05/2021

7.50

1.50

(0.50)

NGOM 02/02/2021

8.00

1.50

0.00

NGOM 03/02/21

8.00

1.50

0.00


Benchmark NTBills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 2-Jul-20

3.00

0.10

(1.00)

NIGTB 1-Oct-20

4.00

0.10

(0.50)

NIGTB 12-Nov-20

4.00

0.15

(0.50)

NIGTB 14-Jan-21

5.00

0.10

0.50

NIGTB 11-Feb-21

5.00

0.15

0.50

 

Money Markets

Money market rates dropped further by an average on c.33bps, boosted by buoyant system liquidity (c.N531.91 positive). OBB and OVN rates consequently closed the day at 2.00% and 2.75% respectively.

We expect these low levels to be maintained until Friday when the market is expected to fund the bi-weekly FX retail auction.


Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

2.00

2.40

Overnight (O/N)

2.75

3.00

 


FX Market

Rates remained fairly stable in the FX market, as supply level remained low for the most part of the trading session, causing no change in closing rates at the 'official' trading segments.

However, we saw Naira depreciate in the cash rate by N3.00k d/d while surprisingly appreciating by same the amount in the transfer rate, indicating slight convergence of FX rate in the cash and transfer markets.

FX Market

Current (N/$)

Previous ( N/$)

CBN Spot

361.00

361.00

CBN SMIS

380.69

380.69

I&E FX Window

385.50

385.50

Cash Market

443.00

440.00

Transfer Market

457.00

460.00

 

Eurobonds

The NGERIA Sovereign tickers had a second consecutive bullish session, supported by the continued recovery in crude oil prices and increasing demand from local participants. Yields dropped by an average of c.29bps across the sovereign yield curve. 

The NGERIA Corps tickers were also largely bullish, most especially the ETINL 24s and FIDBAN 22s which strengthened by 153bps and 208bps respectively.


  Proshare Nigeria Pvt. Ltd. 



Proshare Nigeria Pvt. Ltd.



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