Traders Continue to Pile into the 1yr NTB Issue in the Light of the Meagre Supply of OMO T-Bills

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Friday, June 11, 2021 / 08:22 AM / by Zedcrest Capital / Header Image Credit: Nairametrics


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FGN okays N895bn Supplementary Budget for Vaccines and Security

 

FGN Bonds

The FGN bond market traded on a very sluggish note today with improved bids on some selected FGN Bonds especially at the long end of the curve with very few offers to match. We saw order-driven demand for short-duration bonds, 2023s to 2026s papers, although very few trades were executed due to wide bid/offer spreads. We also saw some demand for the 2050s bond which traded at the early hours around 13.85% but then lost around 10bps on the offer as interest began to build for the paper. Consequently, yields compressed slightly by c.4bps D/D on the average across the benchmark curve.

 

We expect the bond market to close the week on a calm note with a slight bearish bias as traders digest the probable impact of the new FGN supplementary fiscal budget proposal on bond yields.

 

Benchmark FGN Bonds

 

Description

Bid (%)

Offer (%)

Day Change (%)

12.75 27-Apr-23

11.81

11.06

(0.01)

14.20 14-Mar-24

12.50

11.20

(0.01)

13.53 23-Mar-25

12.80

12.10

0.00

12.50 22-Jan-26

12.64

12.00

(0.06)

16.29 17-Mar-27

13.10

12.82

0.00

13.98 23-Feb-28

12.90

12.40

0.00

14.55 26-Apr-29

12.85

12.38

0.05

12.15 18-Jul-34

13.90

13.32

0.00

12.50 27-Mar-35

13.87

13.68

0.00

12.40 18-Mar-36

13.85

13.55

0.00

16.2499 18-Apr-37

13.85

13.30

0.00

9.80 24-Jul-45

13.71

13.55

(0.14)

14.80 26-Apr-49

13.90

13.80

(0.20)

12.98 27-Mar-50

13.89

13.70

(0.26)

 


Treasury Bills

The T-bills market opened the day on an active note as investors sought the secondary market to fill their lost bids at yesterday's NTB auction. The new 1yr NTB paper opened the day quoted at 9.50/9.20 at the early hours but most of the market trades were executed around 9.30%. We also saw demand for the Special treasury bills 30th Aug 2021 maturity albeit offers were scarce during today's session. Traders remained firmly offered on short-mid dated OMO bills which were shunned by real buyers who preferred to buy either the special T-bills and the new 1yr NTB bills which had more attractive yields.

 

At the OMO auction, the CBN offered and raised a total of N30bn while maintaining rates across the three tenors offered.

 

We expect the demand for the new 1yr NTB issue to continue tomorrow albeit offers are expected to remain firmly above the 9% levels. 

 

 

OMO Auction Result

June 10, 2021

Tenor

Rate (%)

Offer (N'bn)

Sub (N'bn)

Sale (N'bn)

Previous Rate (%)

Changes

96 days

7.0000

5.00

7.00

5.00

7.0000

0.0000

166 days

8.5000

5.00

7.30

5.00

8.5000

0.0000

348 days

10.1000

10.00

67.79

20.00

10.1000

0.0000

 


Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOMOB 0 08/10/21

11.00

6.00

0.00

NGOMOB 0 09/07/21

11.00

7.00

0.00

NGOMOB 0 10/19/21

11.00

8.00

0.00

NGOMOB 0 11/02/21

11.00

8.00

0.00

NGOMOB 0 12/07/21

13.00

8.00

0.00

NGOMOB 0 01/11/22

13.00

8.50

0.00

NGOMOB 0 02/01/22

13.00

8.50

0.00

NGOMOB 0 03/01/22

13.00

8.50

0.00

 


Benchmark NT-Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 0 05/13/21

10.00

2.00

0.00

NIGTB 0 06/10/21

10.00

2.00

0.00

NIGTB 0 07/01/21

11.00

3.00

0.00

NIGTB 0 08/26/21

11.00

3.00

0.00

NIGTB 0 09/09/21

9.00

3.50

0.00

NIGTB 0 10/14/21

11.00

4.00

0.00

NIGTB 0 11/11/21

13.00

7.00

0.00

NIGTB 0 01/13/22

13.00

6.00

0.00

NIGTB 0 02/10/22

13.00

7.50

0.00

NIGTB 0 03/01/22

13.00

7.50

0.00

 


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Money Markets

Money market rates trended upward by another 221bps today, as dealers scampered to fund for the NTB PMA over- sales by the DMO, OMO auction, and FX retail bids amidst tight system liquidity. Consequently, Open Buy Back (OBB) and Overnight (O/N) rates closed at 17.00% and 17.25% respectively at the end of the trade session.

 

Tomorrow, we expect a further hike in funding rates as the bi-weekly FX retail intervention auction exacerbates the funding pressure in the interbank market.


Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

17.00

14.67

Overnight (O/N)

17.25

15.17

 


FX Market

The FX space opened the day on a sluggish as traders continued to scramble for funds amidst the poorly supplied FX market.  Traded volumes dropped by 60% from the previous day's close with c.$89.89mio passing through that space. The Naira depreciated by N0.88k to close at N411.83/$, while the bid range stayed unchanged D/D.

 

At the parallel market, the Naira weakened by N2 as the transfer rate closed at N512/$ while the cash rate remained at N500/$.


FX Market

Current (N/$)

Previous (N/$)

CBN SMIS

380.69

380.69

I&E FX Window

411.83

410.95

Cash Market

500.00

500.00

Transfer Market

512.00

510.00

 


Eurobonds: 

The NIGERIA Sovereigns had a calm trading session, as the previous session's bullish run cooled today. Demand remained persistent on the short-dated 2022s and 2023s papers, while we saw more offers on the longer-dated 2038s and 2049s.

 

At the Nigeria Corporates space, the new ETI issue was the toast of the day as investors queued up their bids with bookrunners in anticipation of a bullish outing. Final terms of the bond are as stated below:

 

ETI - 10NC5 year 144A/REGS Tier 2 Sustainability Notes

 

- Yield is set at 8.950%

- Final Bid USD 1.1bn

- Expected Deal Size 350mm

- Status (Book Closed).

 

We saw sizeable offers on most of the other tracked papers especially on the ECOTRA 26s and FBNNL 25s as investors continue to offload their current holdings in other to participate in the new ETINL issue.

 


Proshare Nigeria Pvt. Ltd.




Proshare Nigeria Pvt. Ltd.




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