Fixed income, currency markets transactions in record increase of N1.10trn

by | October 27, 2016 12:50 am

The turnover of transactions carried out in the Fixed Income and Currency (FIC) markets for the month of September 2016 amounted to N10.85trillion; an increase of 11.30% (N1.10trillion) over the value recorded in August and a 5.45% (N0.63trillion) decline year-on-year (YoY), according to the FMDQ OTC Monthly.

The report shows that activities in the Foreign Exchange (FX) market for the month of September accounted for 25.74% (August – 23.29%), while FGN bonds and Unsecured Placements/Takings accounted for 7.16% (August – 2.92%), and 1.96% (August – 4.06%) of the total turnover respectively.

The OTC monthly also shows that Treasury Bills (T.Bills) transactions accounted for 36.85% (August – 33.02%) of the total turnover, while Secured Money Market [Repurchase Agreements (Repos)/Buy-Backs] accounted for 28.24% (August – 31%) 

Transactions in the FX market settled at $7.19billion in September, an increase of 33.10% ($1.79billion) compared with the value recorded in August.

The third Naira-settled OTC FX Futures contract, NGUS SEP 28 2016, with a total outstanding amount of $179.93million, priced at $/N296, matured and was settled within the month. The CBN revised the rates on all outstanding OTC FX Futures contracts, whilst a new 12-month contract – NGUS SEP 20 2017 was introduced at $1/N243.50.

Member-Member trades stood at $1.05billion in the month of September, an increase of 97.15% ($0.52bn) compared with trades recorded in August and 41.53% ($0.31bn) YoY.

Member-Client trades also increased by 26.08%, ($1.27bn) from the previous month and 17.91% ($1.34bn) YoY. In the month under review, the Naira appreciated by 1.46% to close at $/N311.62 in the inter-bank market, whilst it depreciated by 13.10% to close at $/N475 in the parallel market.

Turnover in the Fixed Income market for the month settled at N4.78trn, 6.42% (N0.33trn) below the previous month’s value, with transactions in the T.Bills market accounting for 83.74% of the Fixed Income market turnover. Outstanding T.Bills at the end of the month amounted to N7.01trn (August – N6.62trn) whilst FGN bonds outstanding volume increased by 1.91% N0.12trn) to close at N6.45trn in the period under review. Trading intensity in the Fixed Income market settled at 0.60 and 0.12 for T.Bills and FGN bonds respectively, with maturities between 6 months – 1 year being the most actively traded (N1.82trn).

The short end yields of the FGN bond yield curve gained an average of 2.38%, whilst yields across the medium and long ends declined by an average of 0.12% and 0.09% respectively.

Spread between the 10-year and 3-month benchmarks closed at 3.59% points at the end of the month, compared with 1.14% points recorded in August  Money Market (Repos/Buy-Backs and Unsecured Placements/Takings).

Activities in the Secured Money Market (Repos/Buy-Backs) settled at N3.07trn, 14.21% (N0.51trn) below the value recorded in August.

On a YoY basis, Repos/Buy-Backs turnover recorded a decline of N0.25trn (7.63%). Unsecured Placements/Takings declined by 46.14% (N0.18trn) to close the month at a turnover of N0.21trn; a decline of 74.41% (N0.62trn) YoY. The number of executed trades captured on the E-Bond trading platform for the month of September was 14,436 as against 11,533 recorded in the month of August.

There was an increase of 233.92% on the order book while trades on the RFQ trading venue also recorded an increase of 8.19. Executed trades for T. Bills and FGN bonds recorded an increase of 9.11% and 175.88% respectively.

Iheanyi Nwachukwu