N24.69Trn FG fixed Income Outstanding January 2020
ISMAIL MUSA.
A total of N24.69 trillion federal government of Nigeria’s fixed income has been reported to be outstanding as at the end of January 31, 2020.
January 2020 report of the fixed income and currency (FIC) market segment released by the FMDQ Securities Exchange (FMDQ) weekend, showed that outstanding OMO bills account for about 50 percent share of the amount, with N12.20 trillion.
Outstanding FG bonds stood at N9.84 trillion, while Treasury Bills (T-Bills) outstanding closed January 2020 at N2.65 trillion.
Turnover in the FMDQ Securities Exchange Plc Fixed Income and Currency (FIC) markets for the month ended January 31, 2020, was ₦23.19trillion, representing a MoM1 increase of 40.97 percent or ₦6.74trn, from the turnover recorded in December 2019 which stood at ₦16.45trn.
The FIC January turnover also represented a year on year (YoY) increase of 53.78 percent or ₦8.11trn, from the N15.08 trillion turnover recorded in January 2019.
The report’s analysis of the foreign exchange (FX) segment of the market showed that the total FX market turnover in January 2020 was $24.35billion or ₦8.85trn, representing a 31.71 percent or $5.86billion MoM increase from the turnover recorded in December 2019.
Analysis of FX market turnover by trade type indicated MoM increases across all categories, with Member-Client trades recording the highest MoM increase at 36.15 percent or $3.87billion.
January 2020 FX transaction analysis by product type indicated that the MoM increase in FX turnover was driven more by the 40.47 percent or $3.42bn increase in FX Derivatives turnover, which accounted for 58.35 percent of the MoM increase in total FX market turnover compared to the 24.33 percent or $2.44bn increase in FX Spot turnover.
In the OTC FX Futures Market, the near month OTC FX Futures contract, the NGUS JAN 29 2020 with a total open contract value of $1.57bn matured and was settled, and a new far month contract, NGUS FEB 24 2021 was introduced at an initial contract rate of $/₦365.71.
According to the report, the total value of open OTC FX Futures contracts as at January 31, 2020, stood at .$9.77bn representing a 10bps or $0.01bn increase on the value of open contracts as at December 31, 2019, which stood at $9.67bn, while the total value of contracts settled since inception to date stands at $25.53bn.
The CBN Official Spot US$/₦ exchange rate closed at $/₦307.00 in January 2020, while, the Nigerian Naira appreciated against the US Dollar in the parallel market by $/₦2.00 to close at $/₦360.00, while on December 31, 2019, it closed at $/₦362.00.
Similarly, the Naira appreciated against the US Dollar at the Investors’ and Exporters’ (I&E) FX Window by $/₦0.54, closing at $/₦364.51 as at December 31, 2019, and closed January 2020 at $/₦363.97.
On the fixed income Market segment comprising of, T-bills, OMO bills and GN Bonds, at the end of January 2020, the outstanding value of T-bills increased MoM by 2.71 percent or ₦0.07trn to ₦2.65trillion.
Similarly, the outstanding value of FGN Bonds increased MoM by 4.35 percent or ₦0.41trn to ₦9.84trn. However, the outstanding value of OMObills in January decreased by 6.23 percent or ₦0.81trn MoM to close at ₦12.20trn in January 2020.
Trading intensity for T-bills decreased further to 0.17 in January 2020 from 0.19 recorded in December 2019, while the trading intensity for OMO bills increased to 0.53 from 0.27 over the same period.
The increase in the trading intensity of OMO bills was driven jointly by the 78.40 percent or ₦2.94trn MoM increase in OMO bills turnover in January 2020, as well as the decrease in OMO bills outstanding.
However, the trading intensity for FGN Bonds increased marginally to 0.31 in January 2020 from 0.30 recorded in December 2019 due to the 5.43 percent or ₦0.15trn MoM increase in FGN Bonds turnover.
YTD7, trading intensity for bills, combined for T-bills and OMO bills and FGN Bonds stood at 0.47 and 0.31 respectively, compared to 0.46 and 0.08 recorded in the corresponding period in 2019.
The report further revealed that in January 2020, T-bills and OMO bills within the 6M – 12M maturity bucket were the most traded across all tenors on the sovereign yield curve, accounting for 44.08 percent of the total Fixed Income market turnover. FGN Bonds within the 20Y – 30Y maturity bracket were the most traded among the medium to long-term securities (i.e. 5Y – 30Y), accounting for 13.13 percent of the total Fixed Income market turnover.
Weighted average yields on short and long-term fixed-income maturities decreased by 3.02 percent and 0.87 percent respectively in January 2020.
However, weighted average yields on medium-term fixed income maturities increased by 8.95 percent in January 2020, due to the increase in weight for the 7Y – 10Y maturity bucket. In addition, the average stop rates for T-bills at the primary market declined in January 2020 from December 2019 across all tenors.
The minimum tenor for new OMO bills issued in January 2020 was 361-day, with average stop rates declining by 8bps to 13.20% in January 2020 from 13.28% recorded in December 2019.
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