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Market | Bonds & Fixed Income

FX Rates Remain Under Pressure As CBN Devalues Rates At Its Official Window

Nov 28, 2020   •   by   •   Source: Proshare   •   eye-icon 1442 views

Saturday, November 28, 2020 / 11:30AM / ZedcrestCapital / Header Image Credit: Thebizhub

 

Beloware highlights of trading activities in the fixed income and forex market on November27, 2020

 

FGN Bonds

The FGN Bonds marketclosed the week on a negative note, with yields creeping upwards followingreduced demand amidst supply from local players. Yields expanded by c.22bps onthe average across the benchmark bond curve, with the short-end yields retreatingthe most in reaction to the gradual increase in short-term money market rates.Select maturities at the mid- (2026s and 2028s) as well as long-end (2049s)were not left out as sellers continued to searach for bids which continued toshy away as has been noted all week.

 

We expect the marketto open the coming week with the same week sentiments, with some pockets ofdemand expected on select maturities as institutional investors with residualoutstanding liquidity cherry-pick from the secondary market.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

16.39 27-Jan-22

1.52

0.02

0.32

 

12.75 27-Apr-23

2.21

1.07

0.35

 

14.20 14-Mar-24

2.70

1.17

0.68

 

13.53 23-Mar-25

3.50

0.98

1.00

 

12.50 22-Jan-26

4.20

3.60

0.40

 

16.29 17-Mar-27

4.40

3.50

0.01

 

13.98 23-Feb-28

4.40

3.80

0.00

 

14.55 26-Apr-29

4.40

3.90

0.00

 

12.15 18-Jul-34

5.30

4.90

0.10

 

12.50 27-Mar-35

5.30

4.90

0.10

 

12.40 18-Mar-36

5.10

4.90

0.00

 

16.2499 18-Apr-37

5.20

4.90

0.00

 

9.80 24-Jul-45

6.15

5.40

0.00

 

14.80 26-Apr-49

7.03

6.50

0.33

 

12.98 27-Mar-50

7.00

6.50

0.00

 

 

Treasury Bills

Appetite for OMOsecurities by local banks took a hit today, as bids for the long-datedmaturities pulled back by 10bps. Supply of OMO bills maturing in October and November2021 improved during trading, with local banks offering at 0.15% levels as bidsremained shy. Mid-dated (February 2021) papers remained pressured, with demandseen from a few offshore players at the end of the OMO curve. Consequently,rates across the benchmark OMO curve weakened by 8bps on the average.

 

We expect the marketto remain weak, as apathy for rates at these low levels remains followingdropping system liquidity in the form of FX intervention flows.

 

Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOMOB 01/05/21

0.10

0.00

0.05

NGOMOB 02/02/21

0.10

0.00

0.05

NGOMOB 03/02/21

0.10

0.00

0.05

NGOMOB 05/11/21

0.30

0.10

0.10

NGOMOB 06/08/21

0.30

0.10

0.10

NGOMOB 08/10/21

0.30

0.15

0.10

NGOMOB 09/07/21

0.30

0.15

0.10

NGOMOB 10/19/21

0.30

0.15

0.05

NGOMOB 01/05/21

0.10

0.00

0.05


Benchmark NTBills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 12/31/20

0.10

0.00

0.05

NIGTB 01/14/21

0.10

0.00

0.05

NIGTB 02/11/21

0.30

0.10

0.10

NIGTB 03/11/21

0.30

0.10

0.10

NIGTB 04/29/21

0.30

0.10

0.10

NIGTB 05/13/21

0.30

0.15

0.10

NIGTB 06/10/21

0.30

0.15

0.05

NIGTB 07/01/21

0.30

0.15

0.05

NIGTB 08/26/21

0.30

0.15

0.05

NIGTB 09/09/21

0.30

0.15

0.05

NIGTB 10/14/21

0.30

0.15

0.05

 

Money Markets

The Interbankrates closed the week on a higher note, rising by 50bps to close the week at1.25% and 1.50% for OBB and OVN rates respectively. This is on the back ofreduced system liquidity, which opened the day 13.28% lower at c.N295.48Bn.

 

We expectrates to remain in the lower single digits opening the week as banks receiveinflows from FX funding refunds and OMO maturities.


Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

1.25

0.75

Overnight (O/N)

1.50

1.00

 

FXMarket

Volumestraded in the I&E FX market dropped by 52% D/D in a still relatively activetrading session. The greenback changed crossed above the N400/$ mark for thefirst time since June this year as demand pressures continue to heat up themarket. This came in despite the CBN providing some dollar supply to the foreignportfolio investors (FPIs) at a new rate of N392.25/$.

 

Inaddition, the Apex bank issued a circular to market participants, revising therates at the various official market segments upwards in a move effectivelydevaluing the Naira for the third time this year. The revised rates take effectfrom Monday, November 30, 2020.

 

TheNaira continued to weaken in the parallel market, as demand for the greenbackpersists amidst little supply. The cash and transfer rates lost a further N5.00on the average to close at N495.00/$ and N505.00/$ respectively.

 

 

FX Market

 

 

Current (N/$)

Previous (N/$)

 

 

CBN Spot

379.00

379.00

 

 

CBN SMIS

380.69

380.69

 

 

I&E FX Window

390.25

393.25

 

 

Cash Market

495.00

490.00

 

 

Transfer Market

505.00

500.00

 

MARKET SEGMENTS

JAN.

MAR.

AUG.

NOV.

Official Rate

307

360

380

380

IMTO to Banks

355

376

382

388

Banks to CBN

356

377

383

389

CBN to BDCs

357

378

384

390

BDC to end-users

360

380

386

392

CBN to FPIs

366

380

380

394

 

Eurobonds

With global oil prices retained its recent gains afterthe short slump seen over the Thanksgiving holiday, the NIGERIA Sovereignpapers traded with mixed sentiments in the last session of the week. The yieldcurve remained relatively unmoved as demand remained at the short-end of thecurve countered the selling pressure seen at the long-end.

ANGOLA Sovereign bonds continued to lead the pack ingains in the Sub-Saharan Africa space, as its finance minister reiterated hiscommitment to maintaining positive credit risk for the oil-producing nation.

 

The NIGERIA Corporates saw sustained interestin some of the tracked papers, especially the FIDBAN 2022s which gained 8bpsD/D.

 

 Proshare Nigeria Pvt. Ltd.



Proshare Nigeria Pvt. Ltd.


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 Proshare Nigeria Pvt. Ltd.

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