Debt Securities
Daily update on Treasury Bills, Bonds, Forex etc.
At the parallel market, the cash rates depreciated by 10k to N359.80/$, while the transfer rate remained unchanged at N362.00/$.
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Bonds
Yields in the bond market compressed further by c.13bps in today’s session, capping a 23bps w/w decline in yields. This came on the back of renewed local client interests mostly on the short and mid tenured bonds. We witnessed the most interests today on the 2020, 2021 and 2027 bonds, while other tenors compressed slightly in response to the mild bullish sentiments.
In the coming week, we expect a slight reversal to this trend, with bids expected to weaken in anticipation of the forthcoming bond auction. Whilst not discounting the renewed interests from clients in recent sessions, we do not expect yields to break below a c.15.00% support level on the mid to long end of the curve.
Treasury Bills
T-bills market traded on a calm note, with yields compressing slightly by c.10bps on average, due to slight buys mostly on the short end of the curve (Oct & Nov maturities), as market players looked to invest excess cash flows in absence of an OMO auction by the CBN. The longer end of the curve was also slightly active with some client flows seen on the 19-Sep.
In the coming week, we expect yields to remain relatively stable, as the CBN has begun to show some temperance for liquidity in the system.
Money Market
The OBB and OVN rates remained stable, closing today at 4.00% and 4.75% respectively, as there were no significant outflows from the system which opened the day at c.N518bn positive.
In the coming week, we expect rates to remain moderated with inflows from OMO maturities and FAAC payments expect to offset outflows for CBN’s OMO and FX auctions.
FX Market
At the Interbank, the Naira/USD rate remained stable at N306.30/$ (spot) and N360.94/$ (SMIS). At the I&E FX window a total of $401.69mn was traded in 289 deals, with rates ranging between N358.00/$ – N365.00/$. The NAFEX closing rate depreciated by c.0.11% to N363.68/$ from N363.27/$ previously.
At the parallel market, the cash rates depreciated by 10k to N359.80/$, while the transfer rate remained unchanged at N362.00/$.
Eurobonds
The NGERIA Sovereigns remained bullish in today’s session, with yields compressing by c.12bps on average, consequently capping a c.14bps w/w decline in yields. Interests were more focused on the shorter end of the curve today, with the most interests seen on the Jan 2021.
The NGERIA Corps remained slightly bullish, with the most interests seen on the Zenith 19s and FBNNL 21s.
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.
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)*
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Auction Date: August 19, 2020
Settlement Date: August 21, 2020
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.
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Interest payment: Payable semi-annually.
Redemption: Bullet repayment on the maturity date.
Status:
- Qualifies as securities in which trustees can invest under the Trustee Investment Act
- 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
- Listed on the Nigerian Stock Exchange
- 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
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.
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.
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.
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.
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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
Security: The Federal Government of Nigeria Savings Bond is backed by the full faith and credit of the Federal Government of Nigeria (FGN).
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.
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.
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The statement from the Debt Management Office said:
“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.’’
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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.
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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