Debt Securities
Daily update on Treasury Bills, Bonds, Forex etc.
The OBB and OVN rates crashed by c.11pct to 5.00% and 6.25% respectively
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Bonds
The Bond Market traded on a slightly bullish note, due to a mini rally by some interested buyers who picked on offers on the longer end of the curve (34s – 37s). Yields on the long end consequently declined by c.12bps, with trades as low as 15.15% on the 2037s. There were also slight gains on the mid tenors (26s -28s) which compressed marginally by c.3bps.
We expect an imminent reversal to sentiments witnessed today, with the interests on the long end expected to wane in subsequent sessions. We also expect the mid tenors to remain favoured above the longer tenured bonds.
Treasury Bills
The T-bills market traded on a relatively quiet note, with yields ticking higher by c.20bps, despite the inflows from OMO T-bill maturities and the absence of an OMO auction by the CBN. This was as market players remained constrained by expectations for a retail FX debit and a possible OMO intervention by the CBN tomorrow.
We expect yields to close the week on a relatively flat note, unless the CBN fails to conduct an OMO auction, which would consequently result in resurgent buying interests, with a boost from FAAC payments expected tomorrow.
Money Market
The OBB and OVN rates crashed by c.11pct to 5.00% and 6.25% respectively, as inflows from OMO T-bill maturities (c.N261bn) bolstered system liquidity in absence of an OMO auction by the CBN.
We expect rates to close the week on a moderate tone, with inflows from FAAC payments (c.N350bn) expected to moderate outflows for the Retail FX auction tomorrow. This is however barring a significant OMO sale by the CBN.
FX Market
At the Interbank, the Naira/USD rate remained stable at N306.35/$ (spot) and N361.34/$ (SMIS). At the I&E FX window a total of $255.28mn was traded in 400 deals, with rates ranging between N358.00/$ – N365.00/$. The NAFEX closing rate appreciated by c.0.07% to N363.74/$ from N364.00/$ previously.
At the parallel market, the cash rates depreciated further by 10k to N359.80/$, while the transfer rate remained unchanged at N362.00/$.
Eurobonds
The NGERIA Sovereigns remained significantly bullish as investors continued to cherry-pick across the curve in tune with the recent resurgent interests in EM and across the SSAs. Yields declined significantly by c.15bps across the curve, with the most gains seen on the 2047s which is now below the 8% mark, with a PX gain of c.1.20pct on the day.
The NGERIA Corps remained bullish, with investors firmly bullish on the FIDBAN 22s, following the positive results released recently by the bank. The ticker consequently posted a c.0.50pct PX gain on the day. We also witnessed renewed interest on the SEPLLN 23s which gained c.0.30pct, now trading 99.70/100.70.
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.
READ ALSO: Nigeria’s Eurobond yield hit 12.8% as investors flee emerging markets
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.
READ ALSO: FG responsible for 80% of Nigeria’s N25.7 trillion debt profile
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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