PMA Rates Trend lower as Market Players Oversubscribe the 1-yr bill by 536%

Proshare

Thursday, July 04, 2019    /  08:00AM  /  Zedcrest Capital

 

At the PMA, the DMO rolled over a total of N88.86Bn in maturing treasury bills across three maturities.  The stop rates were closed lower for the 182- and 364-day tenors at 11.70% (+19bps) and 11.91% (+11bps) respectively while the 91-day closed higher at 10.50% (-90bps). Demand again was skewed to 364-day tenor, with a bid-to-cover ratio of 5.36X.

There is a high probability of an OMO auction especially with system liquidity north of N750bn. We maintain our expectation for an uptrend in yields in the near term.

Below are highlights of happenings in the fixed income and forex market on July 03, 2019

 

Bonds

The FGN Bond market traded on a positive note, as locals continue to reinvest bond maturities and coupon payments credited earlier in this week. While demand at the short-end remained, we noticed increased demand for duration as yields on the 2034 -2049 maturities compressed by c.17bps on the average.

Yields closed lower by c.4bps on average across the curve, with relatively large volumes crossed during the trading session.

While we expect demand for FGN Bonds to sustain in the near term, we remain cautious as yields approach a key resistance level (14.00%).

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

14.50 15-Jul-21

13.48

13.05

0.00

16.39 27-Jan-22

13.99

13.07

(0.09)

12.75 27-Apr-23

14.13

13.95

(0.34)

14.20 14-Mar-24

14.78

13.67

0.63

13.53 23-Mar-25

14.10

13.80

0.04

12.50 22-Jan-26

14.28

14.05

(0.14)

16.29 17-Mar-27

14.23

14.06

0.03

13.98 23-Feb-28

14.37

14.21

(0.01)

12.15 18-Jul-34

14.41

14.27

(0.14)

12.40 18-Mar-36

14.30

14.21

(0.18)

16.2499 18-Apr-37

14.30

14.23

(0.20)


Source: Zedcrest Dealing Desk


Treasury Bills

The bullish run in the Treasury Bills market continued in today’s session, as yields across the Benchmark NTB curve compressed further by c.7bps on the average. Demand peaked across the mid- to long-dated maturities, as market participants chased available yields invest available liquidity.



NTB Auction Result - 3 July 2019

Tenor

Rate (%)

Offer (N’bn)

Sub (N'bn)

Sale (N'bn)

91 day

10.50

10.00

10.23

10.00

182 day

11.70

20.00

64.18

20.00

364 day

11.91

58.86

315.77

58.86

Source: CBN


Benchmark Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

18-Jul-19

11.00

5.00

0.00

1-Aug-19

11.00

5.00

0.00

12-Sep-19

11.50

10.00

0.00

3-Oct-19

11.00

9.00

(0.50)

14-Nov-19

12.00

11.40

0.00

5-Dec-19

12.00

11.60

0.10

2-Jan-20

11.75

11.60

(0.25)

6-Feb-20

11.90

11.70

(0.10)

19-Mar-20

12.00

11.70

0.00

2-Apr-20

12.00

11.55

0.00

14-May-20

12.00

11.65

(0.05)

04-Jun-20

12.00

11.40

0.00

Source: Zedcrest Dealing Desk

 

Money Market

Rates in the money market dipped further by c.3.25pct due to the relatively high system liquidity. The OBB and OVN rates consequently ended the session at 3.29% and 4.00%, with system liquidity now estimated at c.N776.67bn positive.

We expect rates to trend higher in tomorrow’s session, as we anticipate another OMO auction by the CBN to manage excess system liquidity.


Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

3.29

6.57

Overnight (O/N)

4.00

7.21

Source: FMDQ, Zedcrest

 

FX Market

At the interbank, the Naira/USD rate remained stable at N306.95/$ (spot) and N357.53/$ (SMIS). The NAFEX rate at the I&E window lost by 9k to N360.52/$, as the market turnover saw a further increase of 7% to close the session at $324.71m.

At the parallel market, the cash and transfer rates remained stable at N358.60/$ and N362.50/$ respectively.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.95

306.95

CBN SMIS

357.53

357.53

I&E FX Window

360.61

360.52

Cash Market

358.60

358.60

Transfer Market

362.50

362.50

Source: CBN, FMDQ, REXEL BDC

 

Eurobonds

The NGERIA Sovereigns extended gains today, alongside global bonds, as investors evaluated the recent dovish appointments to two of the world’s major central Banks. Yields compressed by c.3bps on the average across all the papers on the sovereign curve.

Demand remained strong for the NGERIA Corps in today’s trading session, as we witnessed gains on the ECOTRA 2021 (+49bps), FIDBAN 2022 (+18bps) and ETINL 2024 (+15bps).

 

Proshare Nigeria Pvt. Ltd.

 

 Proshare Nigeria Pvt. Ltd.


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Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

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