Stop rates close higher at the fifth consecutive DMO FGN Bond auction

Proshare

Thursday, August 16, 2018 /06:00AM / Zedcrest Capital

 

KEY INDICATORS

Indicator

Value

Commentary

Inflation

11.14%

As at August 15, 2018, 9bps down from 11.23% recorded in June 2018.

MPR

14.00%

Next MPC meeting scheduled for September 24 & 25, 2018

External Reserves

$46.51bn

As at August 14, 2018. A c.0.10% decrease from $46.55bn as at August 13, 2018.

Brent Crude

$70.85pb

As at August 15, 2018. A c.2.72% decrease from $72.83pb as at August 14, 2018

 

 

Bonds

Activities in the bond market were muted as participants awaited the results of the DMO’s FGN Auction.

Yields closed at c.14.63% on the average, a 1bps DoD change, as pockets demand seen at the short-end countered sell-offs witnessed at the mid- to long-end of the curve.

 

Results at the bond auction showed a continued weakness in demand for bonds, as the stop rates closed higher than the previous month for the fifth consecutive month. The DMO raised c.N39.7bn, only 44.11% of the total offer size. Stop rates rose by c.56bps from their previous level, with the highest uptick witnessed on the 2023s (+70bps).

 

We expect the recent bearish trend in bonds to retrace tomorrow, as investors look to the secondary market to fill demand lost at the auction.

 

FGN Bond – Auction Results

Maturity

Rate (%)

Offer (N'bn)

Sub (N'bn)

Sale (N’bn)

Apr-23

14.39

25.00

6.67

3.97

Mar-25

14.60

25.00

24.35

14.35

Feb-28

14.69

40.00

69.76

21.38

Secondary Market Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

15.54 13-Feb-20

13.96

13.51

(0.05)

14.50 15-Jul-21

14.39

13.84

(0.14)

16.39 27-Jan-22

14.17

13.99

(0.13)

14.20 14-Mar-24

14.73

14.30

0.03

12.50 22-Jan-26

14.91

14.69

0.14

16.29 17-Mar-27

14.83

14.75

0.06

13.98 23-Feb-28

14.89

14.79

0.02

12.15 18-Jul-34

14.74

14.56

0.01

12.40 18-Mar-36

14.85

14.64

0.11

16.2499 18-Apr-37

14.78

14.59

(0.03)

Source: Zedcrest Dealing Desk



Treasury Bills

T-bills market witnessed a quiet trading session with a bearish bias, as investors awaited the results at the Primary Market Auction conducted by the DMO. The NTbills yield curve consequently expanded by c.4bps to close at c.11.87% on the average.

The DMO rolled over the total amount of maturing T-bills, maintaining stop rates as the previous auction except for the 364-day which declined by 8bps. A total of N33.38bn was sold across the 91-, 182- & 364-day maturities.

We expect rates to drop tomorrow as system liquidity increase via inflows from OMO T-bill maturities.

NTB – Auction Results

 

Tenor

Rate (%)

Offer (N'bn)

Sub (N'bn)

Sale (N’bn)

 

91 days

10.00

3.38

3.38

3.38

 

182 days

10.40

10.00

10.05

10.00

 

364 days

11.22

20.00

36.03

20.00

 

Secondary Market Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

13-Sep-18

11.05

10.35

0.05

4-Oct-18

11.05

9.95

0.05

1-Nov-18

11.70

11.35

0.05

6-Dec-18

12.25

11.90

0.05

3-Jan-19

12.35

12.10

0.00

14-Feb-19

12.35

12.10

0.05

14-Mar-19

12.20

11.70

0.05

4-Apr-19

12.20

11.35

0.05

18-Jul-19

11.65

11.10

0.05

Source: Zedcrest Dealing Desk

 

 

Money Market

The OBB and OVN rates trended lower today to close at 9.50% and 10.08% respectively, as system liquidity closed at c.N160bn positive. We expect funding rates to decline tomorrow as inflows via OMO maturities of N440bn hit the system. The CBN is however expected to float an OMO auction to counter these inflows.


Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

9.50

10.38

Overnight (O/N)

10.08

11.17

Source: FMDQ, Zedcrest Research

 

FX Market

The Naira remained stable at both the interbank and I&E FX window, closing the day at N306.05/$ and N362.25/$ respectively.  At the parallel market, the Naira depreciated by N0.30 to close at N359.50/$ at the cash market and transfer rates down by N1.00 to close at N362.00/$.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.05

306.05

CBN SMIS

352.00

352.00

I&E FX Window

362.25

362.30

Cash Market

359.50

359.20

Transfer Market

363.00

362.00

Source: CBN, FMDQ, REXEL BDC

 

 

Eurobonds

The NGERIA Sovereigns continued to rally as yields compressed by c.6bps on the average along the Sovereign curve. Demand was most prominent on the 2027s & 2032s, whose yields compressed by 14bps and 10bps respectively.

 

Demand for the NGERIA Corps slowed at today’s trading session, with yields trending lower by c.2bps on the average across the curve. The DIAMBK 19s and UBANL 22s witnessed the most demand, as yields compressed by 9bps and 10bps respectively.

 

 Proshare Nigeria Pvt. Ltd.


 Proshare Nigeria Pvt. Ltd.

Related News  

1.       DMO Releases Public Debt Data for June 2018; FGN Domestic Debt Declines

2.       EMs see respite as Turkey’s Lira recovers, local markets still on the decline

3.       EM Contagion continue to hit local markets as Bond Yields weaken further

4.       Fixed Income Market Monitor - OVN and OBB Rose to 9.25% and 8.42% Respectively

5.       Average T-Bills Rates Settle at 11.5% as T-Bills PMA and FGN Bond Auction Hold this Week

6.       Investment Opportunities in the FGN Savings Bonds

7.       Bond Yields Spike to 8-Month High as RM offshores cut down on NIGB Holdings amidst EM Rout

8.       Invest in FGN Monthly Bond Auction – August 2018

9.       Markets trade flat as CBN sells OMO to manage maturities

10.   Bond Market Bounces Back from Previous Day Selloff

11.   FirstBank Redeem $300million 8.25% Subordinated Notes

READ MORE:
Related News
SCROLL TO TOP