Bond Yields Trend Lower as Market Players Re-Invest Coupon Inflows

Proshare

Wednesday, July 17, 2019   /  08:00PM  /  Zedcrest Capital / Header Image Credit: Euronext

 

Below are the highlights of trading activities in the Fixed Income and Forex Market on July 16, 2019.

  

Bonds

The FGN Bond market remained bullish with yields lower by c.7bps on the day as real money clients sought to re-invest coupon payments. Demand interests were focused on the mid to long end of the curve, where yields dropped by c.12bps.

We expect demand interests to persist due to the depressed rates in the T-bills market.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

14.50 15-Jul-21

13.67

12.75

(0.03)

16.39 27-Jan-22

13.80

13.04

0.09

12.75 27-Apr-23

13.71

13.46

(0.01)

14.20 14-Mar-24

13.71

13.46

(0.03)

13.53 23-Mar-25

14.21

13.74

0.00

12.50 22-Jan-26

14.06

13.73

(0.25)

16.29 17-Mar-27

14.00

13.88

(0.03)

13.98 23-Feb-28

13.94

13.71

(0.05)

12.15 18-Jul-34

14.27

14.09

(0.08)

12.40 18-Mar-36

14.12

14.07

(0.18)

16.2499 18-Apr-37

14.08

14.03

(0.19)

14.80 26-Apr-49

14.28

14.09

(0.07)


Source: Zedcrest Dealing Desk

 

Treasury Bills

The T-bills market was relatively mixed, with a slight uptick on the short end of the curve, whilst demand interests remained robust on the mid to long end of the curve. Yields were consequently flat on the day as market players positioned for the NTB auction scheduled for tomorrow.

We expect stop rates to clear significantly lower from their previous auction levels at the NTB auction tomorrow, where the CBN is expected to rollover c.N107bn of maturing bills.

 

NTB Auction Expectation

Tenor

Offer (N'bn)

Expected Rate (%)

Previous Rate (%)

91 days

5.85

9.70 - 10.00

10.50

182 days

26.60

10.70 - 11.00

11.70

364 days

74.60

10.85 - 11.15

11.91

Source: Zedcrest Research

 

Benchmark Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

18-Jul-19

10.00

5.00

0.00

1-Aug-19

10.50

9.85

0.50

12-Sep-19

10.60

9.75

0.60

3-Oct-19

10.70

10.00

0.20

14-Nov-19

10.70

10.00

(0.30)

5-Dec-19

10.80

10.30

(0.20)

2-Jan-20

10.85

10.65

(0.15)

6-Feb-20

11.25

11.00

0.10

19-Mar-20

11.25

11.10

(0.05)

2-Apr-20

11.25

11.10

(0.05)

14-May-20

11.25

11.00

(0.05)

04-Jun-20

11.05

10.65

(0.25)

Source: Zedcrest Dealing Desk

Money Market

Rates in the money market remained relatively stable as system liquidity remained robust at c.N350bn. The OBB and OVN rates consequently ended the session at 2.50% and 3.07% respectively.

We expect rates to remain stable as there are no significant outflows anticipated.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

2.50

2.71

Overnight (O/N)

3.07

3.43

Source: FMDQ, Zedcrest

 

FX Market

At the interbank, the Naira/USD rate remained stable at N306.95/$ (spot), and N357.70/$ (SMIS). The NAFEX rate at the I&E window rose higher by 15k to N361.25/$, whilst the market turnover rose higher by c.110% to $340m. At the parallel market, the cash and transfer rate remained stable at N358.10/$ and N361.50/$ respectively.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.95

306.95

CBN SMIS

357.70

357.70

I&E FX Window

361.25

361.10

Cash Market

358.10

358.10

Transfer Market

361.50

361.50

Source: CBN, FMDQ, REXEL BDC

 

Eurobonds

Demand Interests in the NGERIA Sovereigns remained robust, with yields lower by c.6bps on the day 

In the NGERIA Corps, we witnessed sustained demand on the ETINL 24s and slight interest on the SEPLLN 23s. Offers were however slightly improved on the ACCESS 21s and ZENITH 22s.

 

Proshare Nigeria Pvt. Ltd.

 

Proshare Nigeria Pvt. Ltd.

 

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4.      Bullish Momentum Sustained as Average T-Bills Yield Contracts 80bps to 11.1%

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Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

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