A Quiet Trading Session as Primary Market T-Bills Auction Takes Centre Stage

Proshare

Thursday, June 13, 2019   /  08:00PM  /  Zedcrest Capital

 

Activities in the secondary market for Treasury Bills slowed, as market participants shifted their focus on the Primary Market Auction. Offshore demand remained at the long-end, most especially the May and June 2020 maturities. Yields across the Benchmark NTB curve expanded by c.2bps on the average.

At the PMA, the DMO rolled over a total of N129.64bn in maturing treasury bills across three maturities. The stop rates remained stable for the 91- and 182-day tenors at 10.00% and 11.9499% respectively, while the 364-day tenor closed higher at 12.34% (+14bps higher than the previous auction). Demand was also concentrated on the 364-day tenor, with a bid-to-cover ratio of 2.84X.

 

Below are highlights from activities in the fixed income and forex market today.

 

Bonds

The Bonds market continued to trade with weak sentiments and relatively low volumes, as bid/offer spreads remain wide. Yields expanded by c.2bps across the benchmark bond curve, pushing average yields to close the day at 14.70%. We witnessed some demand on some select maturities at the mid- to long-end of the curve around 14.65%.

 

We expect market participants to remain cautious to close the week, as weak sentiments towards bonds persist. 


Benchmark FGN Bonds


Description

Bid (%)

Offer (%)

Day Change (%)

14.50 15-Jul-21

14.77

14.05

0.12

16.39 27-Jan-22

14.70

14.15

(0.01)

12.75 27-Apr-23

14.76

14.31

0.00

14.20 14-Mar-24

14.48

14.12

(0.12)

13.53 23-Mar-25

14.83

14.32

0.15

12.50 22-Jan-26

14.67

14.36

(0.06)

16.29 17-Mar-27

14.73

14.38

0.00

13.98 23-Feb-28

14.75

14.65

(0.01)

12.15 18-Jul-34

14.71

14.54

0.04

12.40 18-Mar-36

14.69

14.57

(0.06)

16.2499 18-Apr-37

14.71

14.47

0.06



























Source: Zedcrest Dealing Desk


Treasury Bills

At the PMA, a total of N129.64bn in maturing treasury bills was rolld over by the DMO across three maturities. The stop rates remained stable for the 91- and 182-day tenors at 10.00% and 11.9499% respectively, while the 364-day tenor closed higher at 12.34% (+14bps higher than the previous auction). Demand was also concentrated on the 364-day tenor, with a bid-to-cover ratio of 2.84X.

 

Despite expectations of an OMO auction by the CBN, we expect the market to trade with bullish sentiments supported by buoyant system liquidity.


Primary Market Auction Results

Tenor

Rate (%)

Offer (’bn)

Sub ('bn)

Sale ('bn)

91-days

10.00

15.00

15.20

15.00

182-days

11.9499

30.00

39.02

30.00

364-days

12.34

84.64

210.81

84.64

 

Benchmark Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

18-Jul-19

12.00

5.00

0.25

1-Aug-19

12.00

5.00

0.25

12-Sep-19

12.15

10.30

0.45

3-Oct-19

11.90

11.75

(0.40)

14-Nov-19

12.15

11.60

(0.15)

5-Dec-19

12.30

11.70

(0.10)

2-Jan-20

12.25

12.00

0.10

6-Feb-20

12.35

12.20

(0.05)

19-Mar-20

12.30

12.15

(0.10)

2-Apr-20

12.40

12.15

0.00

14-May-20

12.40

12.25

0.00

Source: Zedcrest Dealing Desk

 

Money Market

Money Markets resumed from the break lower, fueled by net Treasury bills maturities of c.N125bn. OBB and OVN rates closed the session at 5.43% and 5.71%, as system liquidity is estimated to close the day at c.N337.97bn positive.

 

We expect the rates to close the week higher, as CBN should float an OMO auction to mop up excess system liquidity.

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

5.43

8.71

Overnight (O/N)

5.71

9.50

Source: FMDQ, Zedcrest Research

 

FX Market

At the Interbank, the Naira/USD rate remained relatively stable, unchanged at N307.00/$ (spot) and N356.92/$ (SMIS) as trading resumed from the break. The Naira depreciated by 0.0% at the I&E window, to close at N360.67/$.

The Naira remained relatively stable at the parallel market, as the cash rate lost 0.17% to close at N359.10/$ while the transfer rate remained unchanged at N362.50/$.

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

307.00

307.00

CBN SMIS

356.92

356.92

I&E FX Window

360.67

360.63

Cash Market

359.10

358.50

Transfer Market

362.50

362.50


Source: CBN, FMDQ, REXEL BDC

 

Eurobonds

The NGERIA Sovereigns curve saw a slowdown in back-to-back losses, as suspected attacks on oil in the Middle East & USA-IRAN tensions sent oil prices surging. Yields expanded by c.2bps on the average across the sovereign curve, as demand remains weak for Nigerian papers.

 

The NGERIA Corps were not spared as well, as selling interests remained across the tracked tickers. We witnessed yields on the FBNNL 21s, Zenith 22s and FIDBAN 22s all increase by c.5bps each during the trading session.

 

Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

 

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Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

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