Treasury Yields Trend Higher, as CBN Resumes OMO Auction

Proshare

Thursday, August 08, 2019 / 07:05AM / By Zedcrest Capital 


The T-bills market traded on a bearish note today following the renewed OMO issuance by the CBN on theShort and Long tenured bills offered. In addition, stop rates cleared 10bps and 25bps lower on the 85 and 344day bills, the CBN held off on selling the 183 day tenor. We however note that banks were notrestricted from buying for their own accounts as in the last OMO auction. Average T-bill yields were

higher by c.20bps on the day, with most bids repriced closer to the 11.50% level on the mid to long end

of the curve.

 

Below were highlights of trading activities in the fixed income and forex market today.

 

 

Bonds

The FGN Bond market remained bearish, with bid-ask spreads widening further, following an OMO auction announcement by the CBN. Market players also maintained a risk off stance due to the further decline in oil prices, with Brent crude futures now trading at $56pb. Yields were consequently higher by c.22bps and have now trended higher by c.60bps in the week to date. 

 

We expect yields to remain pressured in the near term, due to weaker oil prices and renewed OMO issuance by the CBN.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

14.50 15-Jul-21

13.88

12.98

0.30

16.39 27-Jan-22

14.16

12.63

0.60

12.75 27-Apr-23

14.06

12.91

0.27

14.20 14-Mar-24

14.01

13.33

                   (0.03)

13.53 23-Mar-25

14.11

13.01

0.13

12.50 22-Jan-26

14.35

13.65

0.35

16.29 17-Mar-27

14.08

13.74

0.07

13.98 23-Feb-28

14.28

13.77

0.27

12.15 18-Jul-34

14.36

14.21

0.17

12.40 18-Mar-36

14.35

14.06

0.20

16.2499 18-Apr-37

14.34

13.96

0.20

14.80 26-Apr-49

14.35

14.10

0.07


Source: Zedcrest Dealing Desk


 

Treasury Bills

The T-bills market traded on a bearish note today. We expect the market to trade on a cautious note tomorrow, as market players await CBN action on the c.N108bn in maturing OMO bills. 

 


OMO Auction Result

Tenor

Rate (%)

Offer (N'bn)

Sub (N'bn)

Sale (N'bn)

85 day

11.30

10.00

20.95

17.74

183 day

Nil

20.00

59.47

No Sale

344 day

12.00

70.00

365.40

96.85

 

 

Benchmark Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

12-Sep-19

10.70

6.00

(0.30)

3-Oct-19

10.75

5.00

0.30

14-Nov-19

10.95

6.00

0.75

5-Dec-19

11.00

8.00

0.00

2-Jan-20

11.50

10.85

0.35

6-Feb-20

11.50

10.90

0.35

19-Mar-20

11.50

10.50

0.35

2-Apr-20

11.50

11.10

0.20

14-May-20

11.10

10.50

(0.05)

04-Jun-20

11.00

10.50

0.00

02-Jul-20

11.50

10.50

0.35

Source: Zedcrest Dealing Desk


 

Money Market

Rates in the money market inched higher by c.4pct as banks funded for the OMO auction (N115bn) by the CBN. The OBB and OVN rates consequently ended the session at 9.00% and 9.79%, with system liquidity now estimated at c.N100bn positive.

 

We expect rates to decline slightly tomorrow, barring a renewed OMO sale by the CBN.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

9.00

4.64

Overnight (O/N)

9.79

5.21

Source: FMDQ, Zedcrest

 

 

FX Market

At the interbank, the Naira/USD rate remained unchanged at N360.90/$ (Spot) and N357.68/$ (SMIS). The NAFEX rate at the I&E window declined by 9K to of N362.83, as volume traded rose by 78% to $302m, on the back of some offshore demand at the CBN OMO auction. At the parallel market, the cash and transfer rates remained stable at N357.50/$ and N362.00/$ respectively.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.90

306.90

CBN SMIS

357.68

357.68

I&E FX Window

362.83

362.92

Cash Market

357.50

357.50

Transfer Market

362.00

362.00

Source: CBN, FMDQ, REXEL BDC

 


 

Eurobonds

The NGERIA Sovereigns traded on a relatively flat note, with most tickers loosing gains recorded earlier in the session.

 

The NGERIA Corps were relatively stable, but with slight sell interest witnessed on the SEPLLN 23s and ETINL 24s.

 

 

Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

 


 

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Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

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