- Investors Splash N12.56 Trillion on Fixed Income, Currency Instruments in February
Trading activities in Nigeria’s Fixed Income and Currencies (FIC) markets in February enjoyed a boost as investors, mostly banks, increased their stake by N860 billion. Transaction turnover for February increased to N12.56 trillion, from N11.71 trillion recorded in January, representing a 7.34 per cent growth month on month (MoM) and 3.46 per cent or N420 billion increase year on year (YoY).
In contrast, the markets recorded a drop in turnover to the tune of N150 billion in January, representing 1.28 per cent decrease compared to the value recorded in December 2017. Year on year, however, turnover was up by 28.17 per cent in January 2018 or N2.57 trillion.
Three segments – Treasury Bills, Foreign Exchange and the Money Market (Repurchase Agreements/Buy-Backs and Unsecured Placements/Takings) – contributed 94.47 per cent to the total turnover in the FIC markets in the review month.
As usual, activities in the Treasury Bills (T.bills) market were more robust than others, as it accounted for 44.44 per cent of market turnover in February, compared to 39.24 per cent in January. The Foreign Exchange (FX) market accounted for 33.13 per cent of the total turnover (37.50 per cent in January).
Transactions in the FX market settled at $12.92 billion (N4.16 trillion) in February, a decrease of 7.78 per cent ($1.09 billion) when compared with the value recorded in January ($14.01 billion).
In the month under review, the naira depreciated at the Investors’ and Exporters’ (I&E) FX Window, closing the month at $/N360.41 (from $/N360.00 as at January 31, 2018), while also trading at a discount to the parallel market, which closed at $/N363.00 (from $/N364.00 as at January 31, 2018).
The CBN4 Official Spot rate depreciated slightly, losing N0.20 to close at $/N305.90 (from $/N305.70 as at January 31, 2018).
Total value traded at the I&E FX Window in February settled at $3.90billion, a decrease of 25.71 per cent ($1.35 billion) relative to the value recorded in January ($5.25 billion). This brings the total value traded at the Window Year to Date to $9.15 billion.
Inter-Member trades recorded $1.36 billion in February, an increase of 23.64 per cent ($0.26 billion) relative to the trades recorded in January ($1.10 billion), and a 63.86 per cent ($0.53 billion) increase year on year.
Member-Client trades stood at $7.45 billion, a decrease of 14.65 per cent ($1.27 billion) from the previous month and a 30.02% ($1.72 billion) increase year on year.
Member-CBN trades recorded $4.11 billion in February ($4.18 billion in January), representing a decrease of 1.67 per cent ($0.07 billion) MoM and a 204.44 per cent ($2.76 billion) increase YoY ($1.35 billion), as the effect of the Secondary Market Intervention Sales (SMIS) continued to boost activity in the FX markets.
The 19th Naira-settled OTC FX Futures contract, NGUS FEB 28, 2018, worth $353.26 million, matured and settled in February, while a new 12-month contract – NGUS FEB 27, 2019 – for $1 billion was introduced by the CBN at $/N362.09.
Turnover in the Fixed Income market for the month under review settled at N6.27 trillion, a 17.63 per cent increase MoM (0.93 trillion). Transactions in the T.bills market accounted for 89.06 per cent of the overall Fixed Income market, an increase from the 86.11 per cent recorded in January.
Outstanding T.bills at the end of the month stood at N12.56 trillion (N11.47 trillion in January), an increase of 9.56 per cent MoM (₦1.91 trillion). FGN bonds outstanding value also increased marginally close at N7.73 trillion, from N7.64 trillion in January.
Trading intensity in the fixed income market for the month under review settled at 0.44 and 0.09 for T.bills and FGN bonds, respectively, from 0.40 and 0.10 respectively recorded the previous month. T.bills between the six and 12 months maturity buckets became the most actively traded, accounting for a turnover of N2.23 trillion in February while short-term yields on the sovereign yield curve increased by an average of 29 basis points (bps) and yields in the medium- and long-term spectrum gained an average of 0.34bps and 0.21bps, respectively.
The spread between 10-year and 3-month benchmark yields closed negative at 1.17 basis points for February 2018 (0.49 bps in January)
Activities in the secured Money Market (i.e. Repos/Buy-Backs) settled at N2.03 trillion in February, 9.14 per cent (N0.17 trillion) higher than the value recorded in January (N1.86 trillion). Year on year, turnover on Repos/Buy-Backs recorded a 21.02 per cent increase (N0.35 trillion) from the value recorded in February 2017 (N1.68 trillion).
Unsecured Placements/Takings closed the month at a turnover of N93.75 billion, a 22.27 per cent decrease (N26.85 billion) from the figure recorded in January (N120.61 billion) and a 33.6 per cent decrease (N47.51 billion) on YoY basis (N141.27 billion as at February 2017).
Average O/N8 NIBOR9 for the period under review stood at 19.91 per cent (11.24 per cent in January), indicating a decrease in inter-bank liquidity.
The number of executed trades captured on the E-Bond Trading System in February amounted to 16,325 as against 17,041 recorded in January while executed T.bills trades decreased by 3.69 per cent (539), similarly FGN bonds decreased by 7.22 per cent (177).
