Fixed Income

Zock Capital & Investment LLC Market Update As Of July 14, 2021


ZOCK CAPITAL AND INVESTMENT LLC MARKET UPDATE AS AT 14TH JU
LY 2021 

MACROECONOMIC INDICES
 Inflation17.93%
MPR11.50%
Brent Crude$77.34bp
External Reserves$33.85bn
GDP-13.50%
Foreign ExchangeN410.13
FOREIGN EXCHANGE MARKET
TenorCurrent Rate ($/N)Previous  Rate ($/N)
CBN Official410.13410.11
CBN SMIS Window380.69380.69
I&E FX Window411.22411.75
Black Market(cash)505.00N503.00

Foreign exchange Market

At the I&E FX market, Naira appreciated by 0.13 % as the dollar was quoted at 411.22 as against the last close of  N411.75. Most participants maintained bids between 400.00 and 412.50 per dollar.

The external reserve position continues to deplete despite crude oil price rally at the global crude oil market.

DAILY FOREIGN EXCHANGE RATES   (DOLLAR / POUNDS / EURO )

DateNaira/Dollar (NGN/USD)Naira/Pound (NGN/GBP)Naira/Euro (NGN/EUR)
Buy/SellBuy/SellBuy/Sell
July 14th,2021500/505702/708590/595
July 13th,2021500/505700/708590/595
July 12th, 2021500/505700/708590/595
July 9th, 2021499/503700/708588/593

CBN/ INTERBANK RATES

DateNaira/Dollar (NGN/USD)Naira/Pound (NGN/GBP)Naira/Euro (NGN/EUR)
July 14th,2021410.13568.04485.73
July 13th,2021410.11566.93486.43
July 12th, 2021410.11568.52486.43
July 9th 2021410.11567.48486.10
July 8th,2021410.12567.48485.17

FIXED INCOME SECURITIES  AND MONEY MARKET  UPDATE

SECONDARY MARKET
The treasury bills secondary market closed on a negative note with average yield across the curve increasing by 17 bps to close at 7.03 % from 6.86 % on the previous day. Average yields across mid and long-term maturities expanded by 36 bps and 19 bps, respectively. However, the average yield across the short-term maturities closed flat at 4.58 %. Yields on 10 bills advanced with the 17-Mar-22 maturity bill recording the highest yield increase of 48 bps.

OMO BILLS
The OMO bills market witness some buying spree across short and mid maturities falling by 48 bps and 26 bps.  The average yield across the curve declined by 23 bps to close at 9.53 %  as against the last close of 9.76 %. However, the average yield across the long-term maturities closed flat at 10.17 %. Yields on the 10-Aug-21 maturity bill recorded the highest yield decline of 78 bps, while yields on 9 bills remained unchanged.

PRIMARY MARKET AUCTION
The CBN held its scheduled Primary Market Auction today, selling treasury bills worth  #150.00 billion across the 91-day (#5.24 billion), 182-day (#7.46 billion), and 364-day (#137.30 billion) tenors.
The stop rates for the 91day and 182day remained unchanged at 2.50 % and 3.50 % while the 364-day tenor cleared lower at 8.67 % as against 9.64% at the previous auction. The auction was oversubscribed by 285 %. However, the direction of rates continues to be influenced by strong investor subscription and the need to minimize the Federal Government borrowing cost.

TREASURY BILLS PRIMARY MARKET AUCTION (PMA).

Tenor14th July,2021
current Stop rate
30TH June 2021
Previous stop rate
912.50%2.50%
1823.50%3.50%
3648.67%9.64%

BENCHMARK SECONDARY MARKET TREASURY BILLS

TenorMaturityClosing Rate (%) Yield (%)
9214-Oct-215.165.23
10628-Oct-215.375.46
12011-Nov-215.585.69
13425-Nov-215.795.92
18313-Jan-226.526.75
19727-Jan-226.736.99
21110-Feb-226.947.24
22524-Feb-227.157.49
24010-Mar-227.367.74
24617-Mar-227.467.87
26031-Mar-228.509.06
29028-Apr-228.559.18
30212-May-228.509.16
31726-May-228.619.32
3329-Jun-229.009.81
35230-Jun-228.609.39

MONEY MARKET
The Overnight rate decreased by 4.50%  to close at 14.50% as against the last close of 19.00%, and the Open Buy Back rate also decreased by 4.50%  to close at 14% compared to 18.50 % on the previous day trading session.

TenorRate (%)
Open buyback19.00
Overnight14.50

INVEST IN FGN MONTHLY BOND AUCTION FOR  JULY 2021
The Central Bank of Nigeria on the authority of The Debt Management Office on behalf of the Federal Government Of Nigeria Offers for Subscription by Auction and is authorized to receive applications for the following;

  • Re-opening)

Auction Date: July 19, 2021
Settlement Date: July 23, 2021

PREVIOUS FGN BOND PMA AUCTION RESULT

Auction Date10 YR15YR25YR30YR
23-Jun-2112.74%13.50%013.70%
19-May-2113.10%14.00%014.20%
21-Apr-2112.25%13.34%13.85%0
24-Mar-2110.50%11.50%12.00%0

FGN bonds secondary market was relatively bearish with some slight demand seen at the short to mid-end of the curve. The average bond yield across the curve cleared higher by 8 bps to close at 9.82 percent from 9.74 percent on the previous day. Average yields across short tenor, medium tenor, and long tenor of the curve expanded by 9 bps, 2 bps, and 5 bps, respectively. The 15-JUL-2021 maturity bond was the best performer with a decline in yield of 30 bps, while FGNSB 15-JAN-2022 and FGNSB 16-JAN-2022 bonds were the worst performers with an increase in yield of 41 bps each. Moreover, the secondary bond market is likely to remain relatively subdued in the short term.

FGN BOND MARKET YIELD CURVE

Global Sukuk Market Growth to Continue in 2021 and Beyond
Sukuk supply is expected to rise in the second half of 2021 after it showed strong growth during 2Q21, supported by strong investor appetite and issuers’ refinancing and funding diversification needs, Fitch Ratings says. Seasonal patterns will affect quarterly Sukuk issuance which, following the summer break, is expected to pick up in the remainder of 2021 and beyond.
The Sukuk market experienced strong market activity in 2Q21 after a slower 1Q21, driven by big-ticket issuance from the Saudi Arabian Oil Company (the largest corporate Sukuk issued to date) and the Indonesian, Turkish and Omani sovereigns.
The growth was driven by issuers aiming to diversify their funding and taking advantage of the low interest-rate environment amid continued fiscal deficits and still-challenging economic conditions. Investor demand remains intact due to new Sukuk supply scarcity and the global hunt for yield.

The Sukuk market experienced strong market activity in 2Q21 after a slower 1Q21, driven by big-ticket issuance from the Saudi Arabian Oil Company (the largest corporate Sukuk issued to date) and the Indonesian, Turkish and Omani sovereigns. The growth was driven by issuers aiming to diversify their funding and taking advantage of the low interest-rate environment amid continued fiscal deficits and still-challenging economic conditions. Investor demand remains intact due to new Sukuk supply scarcity and the global hunt for yield.

FGN SECONDARY MARKET BENCHMARK BOND

DescriptionCoupon (%)Maturity DateYield (%)Closing Price
16.39 27-JAN-2022    16.3927-Jan-226.93105.03
12.75 27-APR-2023    12.7527-Apr-2310.90102.92
14.20 14-MAR-2024    14.2014-Mar-2411.20106.75
13.53 23-MAR-2025    13.5323-Mar-2511.67105.43
12.50 22-JAN-2026    12.5022-Jan-2612.05101.53
16.2884 17-MAR-2027    16.2917-Mar-2712.28116.00
13.98 23-FEB-2028    13.9823-Feb-2812.38107.06
15.00 28-NOV-2028    15.0028-Nov-2812.46112.02
14.55 26-APR-2029    14.5526-Apr-2912.50110.00
12.49 22-MAY-2029    12.4922-May-2912.48100.00
8.50 20-NOV-2029     8.5020-Nov-2912.4879.69
10.00 23-JUL-2030    10.0023-Jul-3012.4586.91
12.1493 18-JUL-2034    12.1518-Jul-3412.3099.02
12.50 27-MAR-2035    12.5027-Mar-3512.8297.91
12.40 18-MAR-2036    12.4018-Mar-3612.7497.69
16.2499 18-APR-2037    16.2518-Apr-3712.77123.36
9.80 24-JUL-2045     9.8024-Jul-4512.9376.99
14.80 26-APR-2049    14.8026-Apr-4913.00113.37
12.98 27-MAR-2050    12.9827-Mar-5013.0899.19

DMO To Auction N150bn FGN Bonds In July

The debt management office DMO says it will offer N150 billion bonds for subscription by auction in July on behalf of the federal government.
In a circular issued on Monday, DMO said the bonds will be in three tranches, comprising n50 billion each. The first is a 10-year re-opening bond to be offered at the rate of 13.98 with a maturity date in February 2021. the second is a 15-year re-opening bond to be offered at a 12.40 percent rate with a maturity date in march 2036; while the third is a 30-year re-opening bond to be offered at a 12.98 percent rate and will mature in March 2050.according to the circular, the auction date is on July 19, 2021, while the settlement date is on July 26, 2021. The Debt Management Office said the transactions will be at N1, 000 per unit subject to a minimum subscription of n50,001,000 and in multiples of n1,000 thereafter. it also said that the interest is payable semi-annually with the redemption expected to be in bullet payment on the maturity date. “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 any accrued interest on the instrument,” the circular reads.

Saudi Arabia and UAE reach deal on OPEC oil output
the OPEC standoff is officially over as Saudi Arabia
and the United Arab Emirates reached a deal Wednesday on output levels. An OPEC source stated that the UAE is allowed to boost the baseline used to determine how much crude the OPEC member is allowed to pump. OPEC talks on a proposal to lift production by a cumulative 2 million barrels a day between August and December fell apart earlier this month after the u.a.e. insisted that its baseline should be raised. reports from Reuters states that the UAE’s baseline would be lifted to 3.65 million barrels per day after the current pact expires in April 2022.investors are still reacting to the news and oil futures are marginally up. brent futures is up 0.20%, currently trading at $76.67 a barrel while the U.S oil is trading at $75.31 a barrel, down 0.07%.

Bank Of Canada Holds Interest Rate, Says It Will Curb Bond Purchases

The Bank of Canada held its key overnight interest rate at a record low of 0.25% as expected on Wednesday and said it would cut its weekly net purchases of the government of Canada bonds to a target of C$2 billion ($1.6 billion) from C$3 billion. In a statement, the central bank said it remained committed to keeping the interest rate unchanged until economic slack was absorbed. This is expected to happen sometime in the second half of 2022.

TURKEY HOLDS RATES AGAIN AS INFLATION RULES OUT SUMMER CUT
Turkey’s central bank kept its benchmark interest rate unchanged for a fourth month on Wednesday, as rising prices and a weakening lira blight the economy’s recovery from pandemic lockdowns. The Monetary Policy Committee held its one-week repo rate at 19% as forecast by all 21 analysts surveyed by Bloomberg. Turkish inflation accelerated faster than all estimates in June due to rising global commodity prices and the easing of coronavirus restrictions, leaving little room for the reduction in borrowing costs President Recep Tayyip Erdogan has sought for July or August.

NAIRA LOSES AT OFFICIAL MARKET
The naira fell against the U.S. dollar at the official market on Tuesday, after it gained slightly in the previous session of the market segment on Monday. The currency remained unchanged at the black market window for two consecutive sessions on a stretch. Data posted on the FMDQ Security Exchange where forex is officially traded showed that the local unit closed at N411.75 per $1 at the official window on Tuesday. This represents a N0.25 or 0.10 percent from the N411.50 rate it exchanged hands with the greenback currency in the previous session on Monday. The last time the currency closed at N411.75 on the dot was on Friday last week. The touched an intraday low of N412.50 and oscillated to a high of N400.00 before closing at N411.75 as of the close of business on Tuesday.

Contact  details :
Judith Idialu
ZOCK Capital and Investment LLC
29, Issac John Street,
G.R.A  ikeja
Lagos  State
                                                                                        Email: info@zockcapital.

DISCLAIMER: This publication is strictly for information purposes only for Zock capital and invests LLC  and its employees take no responsibility or liability as to the accuracy and completeness of the information.
For further ./enquiries/information on this publication, please contact Research and Economic Intelligence
.

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