Trading Activities in the FGN Bond Market Improves as the T-Bills Market Traded on a Tranquil Note

Proshare

Wednesday, February 10, 2021 / 10:27 AM / By Zedcrest Capital / Header Image Credit: Pexels


Proshare Nigeria Pvt. Ltd.


FGN Bonds

Trading activities in the FGN Bond market improved today, albeit it was still a drab trading session with most of the action centred at the belly and tail-end of the bond curve. The short-dated papers continue to suffer from poor supply, despite improved bids through to the 2023s to 2026s papers. We initially saw demand on the 2028s to 2029s bond, with participants lifting offers around 10.10%; however, this was short-lived as more sellers came intra-day to calm all the demand pressures witnessed during the trading session. At the long-end, the 2049s bond was hit on the bid, trading at 10.65% at the peak of the session. Consequently, bond yields compressed by an average of c.18bps across the benchmark curve.

 

We expect the FGN bond market to maintain a bearish posture in the coming days; the DMO's auction at the NTB auction circular should likely give more clarity.

 

Benchmark FGN Bonds

 

Description

Bid (%)

Offer (%)

Day Change (%)

12.75 27-Apr-23

9.16

5.99

(0.84)

14.20 14-Mar-24

9.25

7.48

(0.75)

13.53 23-Mar-25

9.34

8.30

(0.66)

12.50 22-Jan-26

10.00

9.00

(0.01)

16.29 17-Mar-27

10.41

9.60

(0.10)

13.98 23-Feb-28

10.68

10.00

0.18

14.55 26-Apr-29

10.70

10.08

0.17

12.15 18-Jul-34

10.65

10.21

(0.08)

12.50 27-Mar-35

10.65

10.20

(0.17)

12.40 18-Mar-36

10.65

10.20

(0.12)

16.2499 18-Apr-37

10.65

10.21

(0.20)

9.80 24-Jul-45

10.98

10.35

0.00

14.80 26-Apr-49

11.00

10.47

0.00

12.98 27-Mar-50

11.00

10.43

0.00

 

Treasury Bills

The Treasury Bills market traded on a tranquil note, even as spreads tightened as system liquidity improved. At the early hours of trading, we saw some slight interest in the long-dated papers, with bids at 8.50% levels but with no offers to match.


NTB bills remained offered for most of the trading session, but with little interest seen ahead of the coming bi-weekly primary market auction.

 

We expect a cautious trading session tomorrow, as the market focuses on the primary auction and the DMO's response to increased rates. The pressure is expected to be on the DMO to roll over close to N170Bn in maturing bills, as the chances for another repayment remains slim.

 

Primary Market Auction Expectation

NTB  - 13 January 2020

Tenor

Offer (N'bn)

Expected Rate (%)

Previous Rate (%)

91 days

19.78

1.00 - 2.50

0.5500

182 days

10.00

1.50 - 2.75

1.3000

364 days

140.00

2.25 - 3.50

2.0000

 

 

Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOMOB 0 03/02/21

6.50

0.03

0.00

NGOMOB 0 05/11/21

7.00

0.03

0.00

NGOMOB 0 06/08/21

7.50

0.04

0.00

NGOMOB 0 08/10/21

7.50

0.04

0.00

NGOMOB 0 09/07/21

8.50

0.04

0.00

NGOMOB 0 10/19/21

9.00

0.05

0.00

NGOMOB 0 11/02/21

9.00

0.05

0.00

NGOMOB 0 12/07/21

9.50

0.05

0.00

NGOMOB 0 01/13//22

9.80

0.05

0.00

 

Benchmark NT-Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 0 02/11/21

6.50

0.03

0.00

NIGTB 0 03/11/21

6.50

0.03

0.00

NIGTB 0 04/29/21

6.50

0.03

0.00

NIGTB 0 05/13/21

7.00

0.03

0.00

NIGTB 0 06/10/21

7.50

0.04

0.00

NIGTB 0 07/01/21

7.50

0.04

0.00

NIGTB 0 08/26/21

7.50

0.04

0.00

NIGTB 0 09/09/21

8.50

0.04

0.00

NIGTB 0 10/14/21

9.00

0.05

0.00

NIGTB  0 11/11/21

9.50

0.05

0.00

NIGTB  0 01/11/22

9.80

0.05

0.00

NIGTB 0 02/11/21

6.50

0.03

0.00

NIGTB 0 03/11/21

6.50

0.03

0.00

 


Proshare Nigeria Pvt. Ltd. 


Money Markets

System liquidity opened the day at N282BN positive and was further bolstered by inflows from OMO maturities (c.N200BN). Interbank rates improved by 550bps on the average, as OBB and OVN rates closed at 8.50% and 8.75% respectively.

 

We expect rates to remain stable going into tomorrow's session, with no funding pressures expected.


Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

8.50

14.00

Overnight (O/N)

8.75

14.25

 


FX Market

Supply remained poor in the I&E FX window, with the traded volume lower at c.$49million (15% lower than the day before). Most participants were bided between N422.59/$ and N390.00/$ with rates depreciating by 0.63% D/D.

 

It was a mixed day for the Naira at the parallel market, as the cash rate appreciated by N3.50k (0.73%) D/D while the transfer rate weakened by N0.50k to close at N489.50/$.

 

FX Market

Current (N/$)

Previous (N/$)

CBN Spot

379.00

379.00

CBN SMIS

380.69

380.69

I&E FX Window

401.00

398.50

Cash Market

473.50

477.00

Transfer Market

489.50

489.00

 

 

Eurobonds

The NGERIA Sovereign tickers pulled back some gains in today's session despite the continued rally in global oil prices. Bids weakened across the sovereign curve, with the most losses at the long-end of the curve. Yields expanded by c.5bps across the benchmark curve by the close of the day, the mirroring loses seen on the Angola papers which also lost c.5bps on the average on the day.

 

On the flip side, NIGERIA Corps had an active session today, amidst improved demand. The UBANL 2022s, FIDBAN 2022s and SEPPLN 2023s led the gainers, with as yields compressed by c.86bps, c.47bps and 52bps respectively.


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd. 


Related News

1.       Eurobonds: Call it Africa Day, as Egypt and Ivory Coast Both Raise New Issues

2.      NSE Lists the Two FGN Savings Bonds Issued in January 2021

3.      Mild Buying Activities on Long-Term NT-Bills Drive Average Yield 9bps Lower WoW to 1.0%

4.      OMO Auction: CBN Shocks the Markets, Raising Stop Rates to Double Digits

5.      Local Demand Persists to the Bond Market as Yields Continue to Compress

6.      Bond Yields Continue Downward Trend as Demand Persists for a 3rd Consecutive Session

7.      Commercial Papers to Increase in Q1, 2021 - Oluwatosin Ayanfalu

8.     TOTAL Notifies of N30bn Commercial Paper Programme

9.      Sell-Offs Push Secondary Market NT-Bills Average Yield 53bps Higher WoW to 1.1%

10.  Nigeria Redeems USD500m Eurobond - DMO

11.   February 2021 FGN Savings Bonds Offer for Subscription


Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

READ MORE:
Related News
SCROLL TO TOP