Debt Securities
Daily update on Treasury Bills, Bonds, Forex, oil price and more
Daily performance of major economic indicators and highlights from tradings sessions and key statistics such as T-bills, bonds, FX rates, inflation, oil price.
Daily performance of major economic indicators and highlights from tradings sessions and key statistics such as T-bills, bonds, FX rates, inflation, oil price.
FGN Eurobond Yields Trend Higher as Presidency Seeks Approval for New Issue
Buhari seeks NASS approval for $2.78bn Euro bonds
KEY INDICATORS
Bonds
The bond market traded on a relatively flat note in today’s session, with slight buying interests seen on the 26s and 37s, whilst we saw better sellers of the 36s. Yields consequently compressed marginally by c.1bp on average.
We expect yields to remain relatively stable in the near term, as the market remains largely driven by client interests. We however expect yields to trend higher towards month end, as market players price in expectations for renewed supply of bonds at the next FGN Bond Auction.
Treasury Bills
The T-bills market remained scantily traded, with yields compressing marginally by c.5bps on average. We however noted some profit taking on the longer end of the curve, in anticipation of another OMO auction on Thursday.
We expect some more profit taking activities and slight selloff as market players reposition ahead of the OMO auction expected by the CBN on Thursday.
Money Market
The OBB and OVN rates remained relatively stable, closing today at 9.17% and 10.00% as system liquidity remained buoyant at c.N244bn positive.
We expect rates to remain stable, with no significant outflows expected tomorrow.
FX Market
At the Interbank, the Naira/USD rate remained stable at N306.40/$ (spot) and N361.34/$ (SMIS). At the I&E FX window a total of $106.40mn was traded in 252 deals, with rates ranging between N358.00/$ – N365.00/$. The NAFEX closing rate appreciated by c.0.09% to N364.27/$ from N364.61/$ previously.
At the parallel market, the cash rate depreciated by 30k to N360.00/$, while the transfer rate remained stable at N363.00/$.
Eurobonds
The NGERIA sovereigns maintained its recent bearish trend, with yields surging by c.8bps following moves by the Federal Govt to obtain approval for a fresh $2.78bn capital raise from the international market. We witnessed the most selloff on the 30-yr which lost c.1.50pct in price terms.
The NGERIA Corps were mostly quiet, except for slight interests seen on the DIAMBK 19s, which gained c.0.30pct on the day.
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
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)*
READ: UBA reports a 13.3% profit increase in audited FY 2019 financial statement
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.
READ ALSO: Nigeria needs $100 billion annually to fix infrastructural deficit – Finance Minister
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.’’
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.
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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