Eurobonds: Call it Africa Day, as Egypt and Ivory Coast Both Raise New Issues

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Trading activities in the FGN Bond market improved today, albeit it was still a drab trading session with most of the action centred at the belly and tail-end of the bond curve. The short-dated papers continue to suffer from the poor supply, despite improved bids through to the 2023s to 2026s papers.

We initially saw demand on the 2028s to 2029s bond, with participants lifting offers around 10.10%; however, this was short-lived as more sellers came intra-day to calm all the demand pressures witnessed during the trading session.

At the long-end, the 2049s bond was hit on the bid, trading at 10.65% at the peak of the session. Consequently, bond yields compressed by an average of c.18bps across the benchmark curve.

We expect the FGN bond market to maintain a bearish posture in the coming days; the DMO’s auction at the NTB auction circular should likely give more clarity.

Treasury Bills

The Treasury Bills market traded on a tranquil note, even as spreads tightened as system liquidity improved. At the early hours of trading, we saw some slight interest in the long-dated papers, with bids at 8.50% levels but with no offers to match.

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NTB bills remained offered for most of the trading session, but with little interest seen ahead of the coming bi-weekly primary market auction.

We expect a cautious trading session tomorrow, as the market focuses on the primary auction and the DMO’s response to increased rates. The pressure is expected to be on the DMO to roll over close to N170Bn in maturing bills, as the chances for another repayment remains slim.

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Money Markets

System liquidity opened the day at N282BN positive and was further bolstered by inflows from OMO maturities (c.N200BN). Interbank rates improved by 550bps on the average, as OBB and OVN rates closed at 8.50% and 8.75% respectively.

We expect rates to remain stable going into tomorrow’s session, with no funding pressures expected.

FX Market

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Supply remained poor in the I&E FX window, with the traded volume lower at c.$49million (15% lower than the day before). Most participants were bided between N422.59/$ and N390.00/$ with rates depreciating by 0.63% D/D.

It was a mixed day for the Naira at the parallel market, as the cash rate appreciated by N3.50k (0.73%) D/D while the transfer rate weakened by N0.50k to close at N489.50/$.

Eurobonds

The NGERIA Sovereign tickers pulled back some gains in today’s session despite the continued rally in global oil prices. Bids weakened across the sovereign curve, with the most losses at the long-end of the curve. Yields expanded by c.5bps across the benchmark curve by the close of the day, the mirroring loses seen on the Angola papers which also lost c.5bps on the average on the day.

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On the flip side, NIGERIA Corps had an active session today, amidst improved demand. The UBANL 2022s, FIDBAN 2022s and SEPPLN 2023s led the gainers, with as yields compressed by c.86bps, c.47bps and 52bps respectively.

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