Culled—Proshare
September 18, 2019
By Zedcrest Capital
Below were highlights of trading activities in the fixed income and forex market on September 17, 2019.
Bonds
The Bond market started the trading session on a bullish note, as investors looked to re-invest coupon payments received this week. We noted increased demand for duration as investors traded at the long-end of the benchmark bond curve at 14.45% levels.
Sentiments however turned a few minutes to the close of the trading session, as market participants sold-off bonds upon the release of the September 2019 FGN Bond offer circular. The DMO looks under some pressure to raise funding for the national budget, as it increased the offer amount by N5bn to a total of N100bn across the 5-, 10- and 30-year re-openings.
Yields consequently expanded by c.10bps on the average across the FGN benchmark curve to close the trading session.
We expect the bearish sentiments in the market to continue leading up to the FGN Bond auction scheduled for September 25, 2019.
| Benchmark FGN Bonds | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 14.50 15-Jul-21 | 14.56 | 13.76 | 0.29 |
| 16.39 27-Jan-22 | 14.50 | 13.56 | 0.20 |
| 12.75 27-Apr-23 | 14.40 | 14.29 | (0.06) |
| 14.20 14-Mar-24 | 14.36 | 13.74 | 0.08 |
| 13.53 23-Mar-25 | 14.33 | 13.66 | 0.27 |
| 12.50 22-Jan-26 | 14.35 | 13.99 | 0.04 |
| 16.29 17-Mar-27 | 14.31 | 13.96 | 0.05 |
| 13.98 23-Feb-28 | 14.58 | 14.01 | 0.34 |
| 12.15 18-Jul-34 | 14.63 | 14.40 | 0.08 |
| 12.40 18-Mar-36 | 14.50 | 14.40 | (0.10) |
| 16.2499 18-Apr-37 | 14.53 | 14.34 | (0.05) |
| 14.80 26-Apr-49 | 14.72 | 14.49 | 0.11 |
Source: Zedcrest Dealing Desk
Treasury Bills
The T-bills market already traded mixed during today’s sentiments in light of sustained tight liquidity. We noted demand interests on some select short-dated maturities, while better sellers remained at the mid- to long-end of the NTBills benchmark curve.
At the coming PMA auction tomorrow, we expect the 91-day and 182-days stop rates to clear lower due to the retail volume on offer while institutional demand is expected to remain skewed towards to 1-yr bill.
| NTB Auction Expectation – 18 Sept. 2019 | ||||||
| Tenor | Previous Stop Rate (%) | Offer (N’bn) | Expectation (%) | |||
| 91 day | 11.10 | 3.00 | 11.00 – 11.25 | |||
| 182 day | 11.799 | 8.39 | 11.50 – 11.85 | |||
| 364 day | 13.286 | 168.36 | 13.10 – 13.35 | |||
|
Benchmark Treasury Bills | ||||||
| Description | Bid (%) | Offer (%) | Day Change (%) | |||
| 3-Oct-19 | 12.60 | 12.00 | (0.10) | |||
| 14-Nov-19 | 12.65 | 12.00 | (0.05) | |||
| 5-Dec-19 | 12.50 | 12.20 | 0.00 | |||
| 2-Jan-20 | 13.00 | 12.40 | 0.40 | |||
| 6-Feb-20 | 13.00 | 12.35 | 0.00 | |||
| 19-Mar-20 | 12.30 | 12.10 | (0.20) | |||
| 2-Apr-20 | 13.10 | 12.90 | 0.10 | |||
| 14-May-20 | 13.10 | 12.55 | (0.15) | |||
| 04-Jun-20 | 13.40 | 12.75 | 0.00 | |||
| 02-Jul-20 | 13.40 | 12.75 | 0.05 | |||
| 13-Aug-20 | 13.50 | 13.30 | 0.00 | |||
Source: Zedcrest Dealing Desk
Money Market
Inflows from FGN bond coupon payments have eased up some liquidity in the interbank system, reducing Money Market rates by almost half from the previous trading session. System liquidity opened at c.N22.41bn positive, coming back from negative levels. OBB and OVN rates consequently ended the day lower at 17.00% and 18.29% respectively.
We expect money market rates to maintain this downward trend as more inflows from OMO maturities and FGN bond coupons are expected to ease system liquidity.
| Money Market Rates | ||
| Current (%) | Previous (%) | |
| Open Buy Back (OBB) | 17.00 | 33.86 |
| Overnight (O/N) | 18.29 | 36.36 |
Source: FMDQ, Zedcrest
FX Market
At the interbank, the Naira/USD spot and SMIS rates remained stable to close at N306.90/$ and N358.02/$ respectively. At the I&E window, the closing rate for the Naira gained 4k to close the trading session at N362.29/$.
The cash and transfer rates at the parallel markets saw no change, closing at N357.50/$ and N362.50/$ respectively.
|
FX Market | ||
| Current (N/$) | Previous ( N/$) | |
| CBN Spot | 306.90 | 306.90 |
| CBN SMIS | 358.02 | 358.02 |
| I&E FX Window | 362.29 | 362.32 |
| Cash Market | 357.60 | 357.60 |
| Transfer Market | 362.50 | 362.50 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The NGERIA Sovereigns received some positive interests from investors as Nigeria looks poised to benefit from a sustained outage of supply in the aftermath of the drone attacks on Saudi Arabia’s Aramco facilities. We noted better buyers across the sovereign curve, as yields compressed by c.5bps on the average.
The jury is still out for NGERIA Corps, as investors continue to weigh in possibility of further early redemption of the outstanding papers. We noted little flows in the tracked papers.
