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Rates Fall Again As Local Demand Piles Up At NTB Auction

FGN Bonds

Yields on FGN Bonds still dropped today, despite a slowdown in market activities in a drab trading session. We saw more bids across the curve but wide spreads made trading a tad difficult. The 2035s saw some action by the close of the trading session trading around 10.05% while all other maturities coasted around the market opening level with their bid/offer staying wide apart. Consequently, yields compressed by c.3bps on the average across the benchmark curve.

We expect activities to pick up as local investors seek to re-invest there OMO maturities coming in tomorrow.

Benchmark FGN Bonds
DescriptionBid (%)Offer (%)Day Change (%) 
14.50 15-Jul-214.483.37(0.02) 
16.39 27-Jan-224.513.77(0.02) 
12.75 27-Apr-236.265.04(0.18) 
14.20 14-Mar-246.355.370.00 
13.53 23-Mar-256.975.09(0.02) 
12.50 22-Jan-267.776.800.00 
16.29 17-Mar-278.698.05(0.21) 
13.98 23-Feb-288.707.950.00 
14.55 26-Apr-298.908.230.00 
12.15 18-Jul-3410.129.780.00 
12.40 18-Mar-3610.149.860.00 
16.2499 18-Apr-3710.129.900.00 
14.80 26-Apr-4910.9710.610.00 

Treasury Bills

OMO bills space saw very little activities as the market remained one-sided (bearish) throughout the day. We saw some demand interest was seen for the short-dated papers, especially the 20th Aug. 2020 bill in particular which was offered at 3.80% levels. We also saw improved offers on 25th May 2021 at around 5.50% although very few volumes were consummated. The benchmark OMO curve opened and traded flat for most of the trading session with only the 11th May 2021 paper compressing slightly by c.5bps D/D.

The NTB space stayed flat for most of the trading session as market participants look to the outcome of the PMA auction scheduled for today. At the Auction, the DMO successfully rolled over c.N88.86bn as anticipated while dropping stop rates by an average of c.17bps across the three tenors on offer. Demand remained heavy at the auction, especially for the 1yr paper which had the highest bid-to-cover ratio of c.4.19X amongst the three tenors offered.

We expect to see most of treasury bills activities in the NTB space as local investors pursue to fill the unmet demand from the PMA auction.

Primary Market Auction Result
NTB  – 01 Jul 2020
TenorRate (%)Offer (₦’bn)Sub (₦‘bn)Sale (₦‘bn)Previous Rate (%)Changes
91 days1.80010.0024.9810.001.78900.0001
182 days2.04020.0058.8220.001.91000.0013
364 days3.74658.86246.8858.863.39000.0036
Benchmark OMO Bills
DescriptionBid (%)Offer (%)Day Change (%)
NGOMO 8/13/20204.002.500.00
NGOMO 9/3/20205.004.000.00
NGOMO 10/1/20205.504.250.00
NGOMO 11/03/20205.603.500.00
NGOMO 12/01/20206.004.500.00
NGOMO 02/02/20216.504.500.00
NGOMOB 0 03/02/216.504.800.00
NGOMOB 0 03/02/216.504.800.00
NGOMOB 0 05/11/216.504.80(0.50)
 Benchmark NTBills
DescriptionBid (%)Offer (%)Day Change (%)
NIGTB 10/1/20203.500.500.00
NIGTB 11/12/20203.750.500.00
NIGTB 01/14/20214.000.500.00
NIGTB 02/11/20214.000.500.00
NIGTB 04/29/20214.000.500.00
NIGTB 05/13/214.001.800.00
NIGTB 06/10/214.001.800.00

Money Markets

Money market rates dropped significantly today by c.20.36% despite the less robust system liquidity. This may be attributed to lower funding needs and the option available for banks to remain in the SLF window to sort their funding gaps. OBB and OVN closed the day at 11.80% and 12.90% respectively while system liquidity is expected to close at c.N133.67BN.

We expect rates to drop further tomorrow as inflows from the expected OMO maturities estimated at c.N88.86BN is credited into the system.

Money Market Rates
 Current (%)Previous (%)
Open Buy Back (OBB)11.8015.00
Overnight (O/N)12.9016.00

FX Market

The FX market traded a very hushed note as closing rates across all the market segments remained unchanged D/D. Liquidity remained very low in the I&E FX window as the market stayed fully on the bid-side throughout the trading session.

FX Market
Current (N/$)Previous ( N/$)
CBN Spot361.00361.00
CBN SMIS380.69380.69
I&E FX Window386.50386.50
Cash Market458.00458.00
Transfer Market460.00460.00

Eurobonds

We saw slight demand for the NGERIA Sovereigns, albeit skewed to the tail of the curve with more aggressive bids seen across the sovereign papers, with most of the market interest on the 2047s and 2049s. Consequently, yields compressed by an average of c.6bps on the benchmark curve.

Conversely, the NGERIA Corps were slightly bearish with improved offers seen on most of the tracked papers, particularly for ETINL 24s which dropped by c.3bps D/D.

Proshare Nigeria Pvt. Ltd.

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