Daily Update: Nigeria debuts 30year FGN bonds priced at a coupon of 14.80%

Welcome once again to daily summary of the performance of major economic indicators and highlights from tradings sessions and key statistics such as Treasury Bills, bonds, FX rates, inflation, oil price.

This report is dated April 24th, 2019.

Key Indicators 

Bonds

The FGN Bond market was largely order driven in today’s trading session even as the monthly FGN bond auction took centre stage. The 2024 and 2025 bond maturity witnessed some upward correction in yields while the benchmark 10 year bond (2028s) trended down in yield terms by c.8bps due to client demand.

The DMO was only able to raise a total of N97.4Bn across the 5, 10 and 30-year FGN bond tenors, out of the proposed N100bn offered at today’s FGN Bond Auction. The much-anticipated 30-year bond was priced at 14.80% with an Amount Bid to Offered ratio of 4.02x. The new 10yr bond was also priced at a coupon of 14.55% which was largely in line with market expectation. We expect some demand to filter into the market especially on the new 30 year bond based on the attractive issuance yield.

Treasury Bills

The T-bills market traded on a bullish note today with demand seen across the entire yield curve due to the absence of an OMO auction and ample liqudity in the Money Market. Demand was more skewed to the longer end of the curve as investor cherry picked maturities with decent yields.
We anticipate the CBN to float an OMO auction tomorrow to counter inflows from the expected monthly statutory disbursements and OMO Tbills maturity of N46Bn. We expect market activity to oscillate in tandem with the level of liquidity in the Money Market in the near term.

Money Market

OBB and OVN rates declined significantly today to close the session at 11.86% and 12.86% respectively in the absence of any funding pressures by market participants. System liquidity is estimated at N194Bn positive as at close of business today.
We expect rates to trend northwards closing the week, as the CBN is expected to mop up excess cash via OMO auction, Retail FX and Monthly FGN Bond auction sales.

FX Market

At the Interbank Market, the Naira/USD rate remained stable at N306.90/$ (Spot) while the NAFEX closing rate in the I&E window appreciated slightly by 0.06% to N360.29/$. Market turnover also improved by 85% DoD to $261m. At the parallel market, the cash rate remained unchanged at N358.50/$, whilst the transfer rate further appreciated by 0.14% to close at N362.50/$.

Eurobonds

The NGERIA Sovereigns traded on a very calm note today with little or no change in yields during the trading session.

Activity in the NGERIA Corps was also muted, however, we saw better sellers on the FBNNL 21s, ACCESS 21s and ZENITH 22s towards the close of the trading session.

Disclaimer:
Whilst proper and reasonable care has been taken in the preparation and accuracy of the facts and figures presented in this report, no responsibility or liability is accepted by Zedcrest Capital or its employees for any error, omission or opinion expressed herein. This report is not an investment research or a research recommendation and should not be regarded as such. The information provided herein is by no means intended to provide a sufficient basis on which to make an investment decision.

Source: Nairametrics

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