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Debt Securities

Daily update on Treasury Bills, Bonds, Forex etc.

Barring a renewed OMO auction by the CBN, rates should remain relatively stable tomorrow.

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Bonds, CBN

*** High Oil Price Pushes Subsidy on Petrol to N65.60 per Litre*** – Thisday

Bonds

Yields in the bond market declined further in today’s session, compressing by c.9bps d/d. This came as some market players looked to re-invest expected proceeds from Bond coupon payments on the 2027 and 2036 bonds, whilst tighter supply forced yields to moderate across the curve.

Whilst this trend may persist in the interim, we expect pressures from continued rise in T-bills yields as well as renewed supply at the forthcoming bond auction to push yields higher towards month end.

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Treasury Bills

Yields in the T-bills market declined further due to the absence of an OMO auction by the CBN, which forced market players to re-invest excess cash flows mostly at the short end of the curve.

Market players remained cautious on the mid to long end, with interests in those segments mostly client driven. We remain wary of a further uptick in rates ahead of the forthcoming PMA, with a likely resumption in OMO auctions by the CBN expected to pressure rates higher in the interim.

Money Market

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The OBB and OVN rates remained above single digits, closing today 11.83% and 12.67% respectively. The rates remained slightly pressured due to outflows for a wholesale FX auction by the CBN. System liquidity which opened the day at c.N293bn positive is consequently estimated to close at c.N264bn.

Barring a renewed OMO auction by the CBN, rates should remain relatively stable tomorrow.

FX Market

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The Interbank spot rate depreciated by 0.02% to N306.30/$, while the SMIS rate remained unchanged at N359.85/$.  At the I&E FX window, a total of $598.44mn was traded in 250 deals, with rates ranging between N358.00/$ – N364.75/$. The NAFEX closing rate appreciated by c.0.07% to N362.93/$ from N363.18/$ previously.

At the parallel market, the cash rates remained stable at N359.50/$, while transfer rates depreciated by 50k to N362.00/$.

 

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Eurobonds

The NGERIA Sovereigns weakened a bit in today’s session, following slight selloff on the longer end of the curve. Investors have however remained favorably disposed to the tickers, especially those on the shorter end of the curve.

The NGERIA Corps were also slightly bearish, with some selloff seen on the ACCESS 21s and UBANL 22s. We however witnessed slight interests on the FBNNL 21s which gained c.0.12pct on the day.

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Debt Securities

DMO offers N150 billion worth of FGN Bonds for subscription

FGN Bonds are backed by the full faith and credit of the Federal Government of Nigeria.

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Debt Management Office resumes FGN savings bond offer on August 10, Eurobonds, Patience Oniha, DMO, External debt servicing

The Federal Government on Tuesday, 11th August 2020, through the Debt Management Office (DMO), offered for subscription Federal Government Bonds (FGN Bonds) valued at N150 billion.

The FGN bonds are listed in four tranches that include:

  • N25,000,000,000 – 12.50% FGN JAN 2026 (10-Yr Re-opening)
  • N40,000,000,000 – 12.50% FGN MAR 2035 (15-Yr Re-opening)
  • N45,000,000,000 – 9.80% FGN JUL 2045 (25-Yr Re-opening)
  • N40,000,000,000 – 12.98% FGN MAR 2050 (30-Yr Re-opening)*

READ: UBA reports a 13.3% profit increase in audited FY 2019 financial statement

Auction Date: August 19, 2020

Settlement Date: August 21, 2020

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Summary Of The Offer

Issuer: Federal Government of Nigeria (“FGN”)

Units Of Sale: N1,000 per unit subject to a minimum subscription of N10,000 and in multiples of N1,000 thereafter.

Interest rate: For Re-openings of previously issued bonds, (where the coupon is already set), successful bidders will pay a price corresponding to the yield-to-maturity bid that clears the volume being auctioned, plus accrued interest from the original issue date.

READ ALSO: Nigeria’s Eurobond yield hit 12.8% as investors flee emerging markets

Interest payment: Payable semi-annually.

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Redemption: Bullet repayment on the maturity date.

Status:

  1. Qualifies as securities in which trustees can invest under the Trustee Investment Act
  2. Qualifies as Government securities within the meaning of Company Income Tax Act (“CITA”) and Personal Income Tax Act (“PITA”) for Tax Exemption for Pension Funds amongst other investors
  3. Listed on the Nigerian Stock Exchange
  4. All FGN Bonds qualify as liquid assets for liquidity ratio calculation for banks

Security: FGN Bonds are backed by the full faith and credit of the Federal Government of Nigeria and are charged upon the general assets of Nigeria

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Understanding Bonds: A bond is a fixed income instrument that represents a loan made by an investor to a borrower (typically corporate or governmental).

A bond could be thought of as an I.O.U. between the lender and the borrower that includes the details of the loan and its payments.

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A bond has an end date when the principal of the loan is due to be paid to the bond owner and usually includes the terms for variable or fixed interest payments that will be made by the borrower.

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Debt Securities

DMO announces August 2020 FGN Savings Bond offer for subscription

The FGN Savings Bond is backed by the full faith of the Federal Government of Nigeria.

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Debt management office, DMO,Nigeria's Debt to revenue ratio, DMO suspends April 2020 FGN savings bond offer

The Debt Management Office (DMO), on behalf of the Federal Government of Nigeria, recently offered for Subscription the August 2020 Federal Government of Nigeria Savings Bond.

The Federal Government of Nigeria Savings Bond is an investment product issued through the Debt Management Office (DMO) on behalf of the Federal Government.

The FGN Savings Bond is backed by the full faith of the Federal Government of Nigeria. As such, it is deemed to hold no default risk (Zero-Based Risk).

READ MORE: FG makes U-turn on Eurobonds, says it will issue some more

This is, therefore, to inform you that the Federal Government of Nigeria Savings Bond offer(s) for the month of August – 2020 has commenced on the 10th of August, 2020. It will close on the 14th of August, 2020.

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It consists of two (2) tenors:

2-Year FGN Savings Bond due August 12, 2022: 3.61% per annum

3-Year FGN Savings Bond due August 12, 2023: 4.61% per annum

Please find below additional information to guide your application:

Unit of Sale: N1,000 per unit subject to a minimum subscription of N5,000.00 and in multiples of N1,000.00 thereafter, subject to a maximum subscription of N50,000,000.00.

READ ALSO: Nigeria needs $100 billion annually to fix infrastructural deficit – Finance Minister 

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Coupon Payment: Payable every quarter with principal repayment at maturity.

Settlement Date: August 19, 2020.

Coupon Payment Date: November 19, February 19, May 19, August 19

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Security: The Federal Government of Nigeria Savings Bond is backed by the full faith and credit of the Federal Government of Nigeria (FGN).

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Debt Securities

Debt Management Office resumes FGN savings bond offer on August 10

The DMO assured that the Bond offers were going to resume when the conditions change.

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Debt Management Office resumes FGN savings bond offer on August 10, Eurobonds, Patience Oniha, DMO, External debt servicing

The Debt Management Office (DMO) has announced the resumption of its Federal Government of Nigeria (FGN) Savings Bond Offer with effect from August 10, 2020.

This disclosure was made in a press statement by the Debt Management Office to the general public.

The DMO was earlier forced to suspend the monthly offers of the FGN Savings Bond in April 2020, due to the lockdown and restrictions placed on social and economic activities as part of measures implemented by government to contain the spread of the Coronavirus pandemic.

READ ALSO: FG responsible for 80% of Nigeria’s N25.7 trillion debt profile 

The statement from the Debt Management Office said:

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“The DMO wishes to announce the resumption of its offer of the federal government of Nigeria savings bond (FGN savings bond) effective August 2020.

“The DMO was constrained to suspend the monthly offers of the FGN savings bond in April 2020 due to the restrictions on activities and movement as part of measures adopted by the government to curtail the spread of COVID-19.

“The offer for subscription will open on Monday, August 10, 2020 and close on Friday, August 14, 2020.’’

READ ALSO: State Governors parted with N33.9 billion to external debt deductions

The statement also encouraged investors to continue to save through the FGN Savings Bond. This is because FGN Savings Bonds attract good returns and are secure, being a Sovereign instrument. They also contribute to national development.

Nairametrics had on April 4, 2020, reported the suspension of the FGN Savings Bond offer by DMO which was scheduled for April 6 –April 10., due to the restrictions caused by the coronavirus pandemic.

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The DMO assured that the Bond offers were going to resume when the conditions change.

The DMO, however, noted that the suspension of the April 2020 Offer would not affect Coupon Payments due to investors for already issued FGN Securities, as arrangements had been made to ensure that all Coupon Payments for and redemptions of FGN Securities were made as and when due to investors’ designated accounts.

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