FGN Bond Yields Compress Following Robust Auction Demand

Proshare

Friday, July 26, 2019 06:00 AM/ By Zedcrest Capital / Header Image Credit: Investors King


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

 

Bonds

Yields in the FGN Bond market declined significantly by c.17bps, as market players reacted to the strong demand and relative under supply of bonds at the auction in the previous session. The most impact was felt on the short and mid end of the curve due, to the significant amount of unsuccessful bids and lower clearing rates on those tenors.

 

We expect yields to remain depressed in the interim, due to the paucity of offers in the market.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

14.50 15-Jul-21

13.30

12.43

(0.01)

16.39 27-Jan-22

13.01

12.10

(0.48)

12.75 27-Apr-23

13.09

12.84

(0.51)

14.20 14-Mar-24

13.59

12.65

(0.15)

13.53 23-Mar-25

13.52

12.57

(0.19)

12.50 22-Jan-26

13.93

13.32

(0.05)

16.29 17-Mar-27

13.79

13.50

(0.15)

13.98 23-Feb-28

13.87

13.60

(0.11)

12.15 18-Jul-34

14.13

13.98

(0.10)

12.40 18-Mar-36

14.13

13.84

(0.07)

16.2499 18-Apr-37

14.04

13.83

(0.18)

14.80 26-Apr-49

14.12

14.01

(0.08)


Source: Zedcrest Dealing Desk
 

 

 

 

Treasury Bills

The T-bills market traded with mixed sentiments during the session, with inflows from OMO T-bill maturities spurring slight interests on the long end of the curve, whilst we witnessed more profit taking around the mid tenors as market players sought to raise liquidity for their funding obligations.

 

We expect yields to remain slightly pressured tomorrow, with outflows for bond auction settlement expected to further impact on system liquidity levels.

 

 


Benchmark Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

1-Aug-19

10.00

9.00

(0.50)

12-Sep-19

10.25

10.00

(0.25)

3-Oct-19

10.50

10.00

(0.25)

14-Nov-19

10.50

10.25

(0.50)

5-Dec-19

11.10

10.45

0.15

2-Jan-20

11.25

11.05

0.20

6-Feb-20

11.15

10.65

0.25

19-Mar-20

11.15

10.65

0.20

2-Apr-20

11.20

10.65

0.20

14-May-20

11.05

10.70

(0.20)

04-Jun-20

11.05

10.50

(0.20)

Source: Zedcrest Dealing Desk


 

Money Market

Rates in the money market remained elevated, despite the OMO T-bill inflows of c.N90bn. The OBB and OVN rates consequently ended the session at 14.29% and 15.00%, with system liquidity currently estimated at c.N30bn.

 

We expect rates to trend higher tomorrow, due to expected outflows for the FGN bond auction settlement (N86bn).

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

14.29

15.86

Overnight (O/N)

15.00

16.43

Source: FMDQ, Zedcrest

 

 

 

FX Market

At the interbank, the Naira/USD rate remained stable at N306.90/$ (Spot) and N357.70/$ (SMIS).  The NAFEX closing rate at the I&E window rose further by 16k to N361.91/$, whilst the market turnover dipped by 55% to $173m. At the parallel market, the cash and transfer rates rose by 20k and 50k to N357.70/$ and N362.00/$ respectively.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.90

306.90

CBN SMIS

357.70

357.70

I&E FX Window

361.91

361.75

Cash Market

357.70

357.50

Transfer Market

362.00

361.50

Source: CBN, FMDQ, REXEL BDC 

 

 

Eurobonds

There NGERIA Sovereigns sustained gains in today’s session, with yields lower by c.7bps on the day.

 

The NGERIA Corps were relatively stable, but with slight gains witnessed on the ACCESS 21s, ZENITH 22s and UBANL 22s.

 

 


Proshare Nigeria Pvt. Ltd. 



Proshare Nigeria Pvt. Ltd.


 

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Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

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