Treasury Bills Take Center Stage with Two Primary Auctions (NTB and OMO) Held Today

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Thursday, April 01,  202/ 11:18 AM / By Zedcrest Capital / Header Image Credit: Novarick


Proshare Nigeria Pvt. Ltd.


FGN Bonds

The FGN bond market continued to trade on a cautious note, as sellers improved offers while investors seemed uninterested and opting to remain on the side-lines. We noted supply at the long-end of the bond curve, with the 2045s bond tightly priced and changing hands a few basis points below the 12.00% mark. The 2049s and 2050s followed suit, with bids hitting the 11.90% mark on those papers. Yields expanded by c.9bps on the average across the benchmark curve.

 

We expect market demand for bonds to stay muted in the interim as short-term rates remain elevated as well as expected slight selling pressure as the month draws to a close.

 

Benchmark FGN Bonds

 

Description

Bid (%)

Offer (%)

Day Change (%)

12.75 27-Apr-23

6.95

6.00

0.00

14.20 14-Mar-24

8.70

6.80

0.00

13.53 23-Mar-25

9.00

7.80

0.50

12.50 22-Jan-26

10.55

10.20

0.15

16.29 17-Mar-27

10.65

10.30

0.00

13.98 23-Feb-28

10.65

10.35

0.00

14.55 26-Apr-29

10.75

10.40

0.00

12.15 18-Jul-34

11.60

11.40

0.05

12.50 27-Mar-35

11.70

11.45

0.10

12.40 18-Mar-36

11.70

11.40

0.05

16.2499 18-Apr-37

11.72

11.40

0.07

9.80 24-Jul-45

12.15

11.95

0.15

14.80 26-Apr-49

12.00

11.82

0.10

12.98 27-Mar-50

12.00

11.75

0.10

 

Treasury Bills

The participants in the treasury bills space continued the hunt for securities for a second consecutive session as local and offshore players looked reinvest flows from recent maturities. Demand remained focused on short-dated papers, as the CBN Special Bill (31-May-2021 maturity) remained in high demand as supply dried up.

 

In a bid to address this, not one but two, primary auctions were floated as both the DMO and CBN held primary auctions for NTBs and OMOs simultaneously for the first time in about 2 years. The DMO took advantage of the improved demand to oversell the offered amount by 151% whilst taking up the 1-year rate by 100bps to 8.00%. The CBN maintained the stop rates at the OMO auction again amidst the strong demand (bid-to-cover ratio of 3.27X across the tenors).

 

We expect increased activity opening tomorrow following supply from both auctions. There remains an outside chance for yet another OMO auction by the CBN to meet the outstanding demand for securities, especially from the foreign portfolio investors.

 

Primary Market Auction Result

OMO - March 31, 2021

Tenor

Rate (%)

Offer (N'bn)

Sub (N'bn)

Sale (N'bn)

Previous Rate (%)

Changes

89 days

7.0000

10.00

33.50

10.00

7.0000

0.0000

180 days

8.5000

20.00

48.15

20.00

8.5000

0.0000

362 days

10.1000

70.00

245.13

70.00

10.1000

0.0000



NTB  - March 31, 2021

Tenor

Rate (%)

Offer (N'bn)

Sub (N'bn)

Sale (N'bn)

Previous Rate (%)

Changes

91 days

2.0000

10.00

9.42

2.88

2.0000

0.0000

182 days

3.5000

17.60

12.74

3.24

3.5000

0.0000

364 days

8.0000

68.08

190.43

138.72

7.0000

1.0000

 

 

Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOMOB 0 05/11/21

13.00

0.01

0.00

NGOMOB 0 06/08/21

13.00

0.01

0.00

NGOMOB 0 08/10/21

13.00

0.05

0.00

NGOMOB 0 09/07/21

13.00

0.05

0.00

NGOMOB 0 10/19/21

13.00

0.05

0.00

NGOMOB 0 11/02/21

13.00

0.10

0.00

NGOMOB 0 12/07/21

13.00

0.10

0.00

NGOMOB 0 01/11/22

13.00

0.10

0.00

NGOMOB 0 02/01/22

13.00

0.10

0.00

NGOMOB 0 03/01/22

13.00

0.10

0.00

 

Benchmark NT-Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 0 04/29/21

13.00

0.01

0.00

NIGTB 0 05/13/21

13.00

0.01

0.00

NIGTB 0 06/10/21

13.00

0.02

0.00

NIGTB 0 07/01/21

13.00

0.01

0.00

NIGTB 0 08/26/21

13.00

0.05

0.00

NIGTB 0 09/09/21

13.00

0.05

1.00

NIGTB 0 10/14/21

13.00

0.05

1.00

NIGTB 0 11/11/21

13.00

0.10

0.00

NIGTB 0 01/13/22

13.00

0.10

0.00

NIGTB 0 02/10/22

13.00

0.10

0.00

 


Money Markets

Money market rates weakened on the day following the surprise OMO auction floated by the CBN. The OBB and O/N rates moved higher by c.200bps on the average as the OMO auction took out c.144Bn of the system liquidity.

 

We expect funding rates to open higher as the net NTB debit hits the system and as local banks provide funding for the FX Retail auction debit at the end of this week.


Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

8.25

6.33

Overnight (O/N)

9.25

7.17

 


FX Market

The FX space traded amidst poor supply, as traded volumes dropped by 26% from the previous day’s close (c.$35.37mio traded). The Naira appreciated by N0.33k to close at N408.67/$.

 

At the parallel market, the Naira weakened as both the cash and transfer rates depreciated by 0.31% (N1.50k) and 0.24% (N1.200k) respectively as demand continues to outweigh supply in the space.


FX Market

Current (N/$)

Previous (N/$)

CBN Spot

379.00

379.00

CBN SMIS

380.69

380.69

I&E FX Window

408.67

409.00

Cash Market

484.00

482.50

Transfer Market

498.50

497.30

 


Eurobonds

The NIGERIA Sovereigns continued to trade on a negative note as yields across the curve expanded for a third consecutive session, keeping with the theme seen across the SSA space. Yields rose on the sovereign curve by c.3bps on the average with a lot of the selling action seen from month-end position shedding.

 

Conversely, the NIGERIA Corporates traded with positive sentiments as we saw demand on the shorter-dated instruments. The ACCESS 2021s and FIDBAN 2022s led the gainers chart as yields on both papers dropped by c.17bps and c.21bps respectively. Demand for the newly-issued SEPPLN 2026s lost some steam yester as the paper closed flat on the bid, despite improved offers seen.


Proshare Nigeria Pvt. Ltd.



Proshare Nigeria Pvt. Ltd.



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 Proshare Nigeria Pvt. Ltd.

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