T-bill Yields Spike by 130bps as Offshore Selloffs Persist

Proshare

Thursday, August 15, 2019 / 09:00 AM / By Zedcrest Capital / Header Image Credit: gridnigeria

 

The T-bills market traded on a significantly bearish note, recording its highest day on day uptrend in yields of c.130bps in the year to date, as offshore investors maintained aggressive selloffs on the short dated T-bill maturities. 

Below are highlights of trading activities in the Fixed Income & Forex Market on August 14, 2019

 

Bonds

The FGN Bond market resumed from the break on a firmly bearish note, as market players reacted to the increasing selloffs by offshore investors in the Treasury Bills market. Yields consequently rose by c.22bps on the day, with the most impact felt on the short to mid end of the curve.

Selloffs within the market has been largely driven by weakening global economic fundamentals and recessionary fears, given the current inversion of the US and UK Treasury yield curves. We expect these risk off sentiments to continue to impact on investors’ appetite for FGN Bonds in the near term.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

14.50 15-Jul-21

14.17

13.71

0.45

16.39 27-Jan-22

13.90

12.83

0.00

12.75 27-Apr-23

14.25

14.01

0.35

14.20 14-Mar-24

14.34

13.74

0.38

13.53 23-Mar-25

14.17

13.52

0.16

12.50 22-Jan-26

14.36

14.00

0.23

16.29 17-Mar-27

14.39

14.11

0.26

13.98 23-Feb-28

14.45

14.19

0.30

12.15 18-Jul-34

14.37

14.24

0.08

12.40 18-Mar-36

14.45

14.30

0.15

16.2499 18-Apr-37

14.50

14.14

0.19

14.80 26-Apr-49

14.50

14.35

0.09


Source: Zedcrest Dealing Desk

 

Treasury Bills

The T-bills market traded on a significantly bearish note, as offshore investors maintained aggressive selloffs on the short dated T-bill maturities. The CBN sold c.N34bn T-bills at the NTB auction held today, with stop rates clearing higher on the 182 and 364-day tenors and marginally lower on the 91-day tenor.

We expect the market to remain bearish due to continued offshore selloffs, and expectations for higher OMO clearing rates by market players. 

 

NTB Auction Result

Tenor

Rate (%)

Offer ('bn)

Sub ('bn)

Sale (’bn) 

91-days

9.70

4.38

15.06

4.38

182-days

11.35

10.00

8.59

3.00

364-days

12.00

20.00

122.88

27.00

Source: CBN 


Benchmark Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

12-Sep-19

13.50

12.30

1.35

3-Oct-19

14.00

13.50

1.30

14-Nov-19

10.90

9.50

(0.05)

5-Dec-19

14.00

13.00

1.85

2-Jan-20

14.00

13.00

1.70

6-Feb-20

14.00

12.80

1.50

19-Mar-20

13.25

12.75

1.10

2-Apr-20

14.00

12.80

1.80

14-May-20

13.50

11.80

1.35

04-Jun-20

13.50

11.80

1.30

02-Jul-20

13.50

11.80

1.30

Source: Zedcrest Dealing Desk

  

Money Market

Rates in the money market inched slightly higher, as banks provided funding for the CBN’s Wholesale FX auction. The OBB and OVN rates consequently ended the session at 13.86% and 14.64%, with system liquidity currently estimated at c.N60bn positive.

We expect rates to remain elevated in the near term, due to the relatively tight system liquidity levels

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

13.86

12.14

Overnight (O/N)

14.64

12.86

Source: FMDQ, Zedcrest

  

FX Market

At the interbank, the Naira/USD rate remained unchanged at N360.90/$ (Spot) and N357.68/$ (SMIS). The NAFEX rate at the I&E window however fell by 22k to N363.22/$, with total volume traded also down by 62% to $299m. At the parallel market, the cash and transfer rate remained unchanged at N357.80/$ and N363.00/$ respectively.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.90

306.90

CBN SMIS

357.68

357.68

I&E FX Window

363.22

363.44

Cash Market

357.80

357.80

Transfer Market

363.00

363.00

Source: CBN, FMDQ, REXEL BDC


Eurobonds

The NGERIA Sovereigns traded on a significantly bearish note as investors continued to dump risky EM bonds in the wake of weakening global economic fundamentals. The Nigerian Sovereign bond yields rose higher by c.20bps during the trading session, with the 47s and 49s the most hit during the session.

IN the NGERIA Corps, we witnessed some interests in the ACCESS 21s and ZENITH 22s, whilst traders remained better sellers of the ETINL 24s.

  

Proshare Nigeria Pvt. Ltd.

 

 Proshare Nigeria Pvt. Ltd.


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Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

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