Culled—-Proshare
June 2, 2020
By Zedcrest Capital
FGN Bonds
The FGN bond market opened on a chaotic note, with bids/offer widely dispersed on most of the benchmark maturities. The bulls tried to shrug off unattractive levels, picking bonds offered at levels slightly better than screen. Market appetite was skewed to the long end of the curve in particular 2049s and 2050s bond which traded around 12.25% and 12.30% respectively, with some interest seen on the 2023s maturity which traded around 8.50% levels just before the close of trading. Bids adjusted downward across the curve as yields compressed at an average of c.29bps.
We expect to see sustained demand in tomorrow’s session, as local players still have excess funds at their disposal.
| Benchmark FGN Bonds | ||||
| Description | Bid (%) | Offer (%) | Day Change (%) | |
| 14.50 15-Jul-21 | 6.99 | 4.71 | (0.83) | |
| 16.39 27-Jan-22 | 7.81 | 4.88 | (1.23) | |
| 12.75 27-Apr-23 | 9.14 | 8.39 | 0.00 | |
| 14.20 14-Mar-24 | 9.15 | 8.39 | (0.23) | |
| 13.53 23-Mar-25 | 8.72 | 8.15 | (0.60) | |
| 12.50 22-Jan-26 | 10.17
| 9.40 | (0.36) | |
| 16.29 17-Mar-27 | 11.00 | 10.07 | 0.00 | |
| 13.98 23-Feb-28 | 11.03 | 10.18 | (0.09) | |
| 14.55 26-Apr-29 | 11.05 | 10.49 | (0.16) | |
| 12.15 18-Jul-34 | 11.35 | 11.02 | (0.19) | |
| 12.40 18-Mar-36 | 11.36 | 11.04 | (0.07) | |
| 16.2499 18-Apr-37 | 11.39 | 11.14 | (0.11) | |
| 14.80 26-Apr-49 | 12.48
| 12.20 | 0.06 | |
Treasury Bills
Treasury Bills market was quite noisy today with lots of quotes for mid- and long-dated bills, albeit with small volumes were traded. Most of the volumes traded were on February bills, particularly 16th February maturity which was fairly offered above market levels trading around 6.00% levels. We also saw bits of interest for the newly issued OMO bill 11th May maturity, but the bid/ask spread to close trades. Rates compressed further by c.138bps from Friday’s closing levels.
The NTB market traded in a similar pattern, with trades concentrated at the belly of the curve particularly on the newly issued 182-day maturity largely driven by client’s retail demand. Rates dropped by c.40bps on the average across the benchmark NTB curve.
With system liquidity over c.N525bn positive, we expect demand to persist going into tomorrow’s session, as local banks seek to lock-in their excess liquidity in the few available instruments.
| Benchmark OMO Bills | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| NGOM 6/4/2020 | 4.00 | 0.10 | 0.00 |
| NGOM 7/2/2020 | 7.04 | 4.00 | 0.00 |
| NGOM 8/13/2020 | 6.50 | 1.50 | (1.63) |
| NGOM 9/3/2020 | 7.00 | 1.50 | (1.17) |
| NGOM 10/1/2020 | 7.00 | 1.50 | (1.22) |
| NGOM 11/03/2020 | 7.00 | 1.50 | (1.28) |
| NGOM 12/01/2020 | 8.00 | 1.50 | (1.42) |
| NGOM 01/05/2021 | 8.00 | 1.50 | (1.51) |
| NGOM 02/02/2021 | 8.00 | 1.50 | (2.72) |
| NGOM 03/02/21 | 8.00 | 1.50 | (2.81) |
| Benchmark NTBills | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| NIGTB 2-Jul-20 | 4.00 | 0.10 | 0.00 |
| NIGTB 1-Oct-20 | 4.50 | 0.15 | (0.05) |
| NIGTB 12-Nov-20 | 4.50 | 0.10 | (0.61) |
| NIGTB 14-Jan-21 | 4.50 | 0.15 | (0.66) |
| NIGTB 11-Feb-21 | 4.50 | 0.10 | (0.68) |
Money Markets
The interbank market opened at c.525BN positive leaving OBB and OVN at single digits’ levels around 2.40% and 3.00% respectively, with a slight increase on the OBB rates. With no significant funding pressures, we expect the market to trade around this level in interbank session tomorrow.
| Money Market Rates | ||
| Current (%) | Previous (%) | |
| Open Buy Back (OBB) | 2.40 | 2.20 |
| Overnight (O/N) | 3.00 | 3.00 |
FX Market
The I&E FX window remained poorly supplied with little volumes (c.$22m) passing through the market. Most participants were bided between N383.00/$ and N387.00/$, causing the closing rate to depreciate by 0.21% D/D. However, rates across all other market segments remained unchanged as activities in the FX market stayed feeble for the day.
| FX Market | ||
| Current (N/$) | Previous ( N/$) | |
| CBN Spot | 361.00 | 361.00 |
| CBN SMIS | 380.69 | 380.69 |
| I&E FX Window | 385.50 | 386.33 |
| Cash Market | 440.00 | 440.00 |
| Transfer Market | 460.00 | 460.00 |
Eurobonds
The NGERIA Sovereign tickers traded on a muted note, as calm was seen through the curve. Although we saw more offers for maturities around 2025s to 2047s, yields strengthened across the curve compared to Friday. Yields compressed on an average of c.11bps across the curve.
The NGERIA Corps tickers also had a quiet session, with the only movement on the day among tracked papers seen on UBA 2022s and SEPPLN 2022s which strengthened by 58bps and 89bps respectively.
