FMDQ OTC market … monthly review

OTC Market Summary

Total turnover recorded in the Fixed Income and Currency Markets (FIC) for the month of October 2015 was N14.54trn; an increase of N3.06trn (26.7%) MoM1 and a 28% (N3.22trn) increase YoY.

Activities in the T.bills segment dominated the market, accounting for 42% of total turnover; up from a contribution of 37% recorded in the previous month.

FX market contribution to turnover declined 2% from the previous month to 17%, recording a total of $12.83bn; inclusive of Member-CBN trades.

Secured market (Repos/Buy-Backs) transactions accounted for 20% of total turnover in October; down 9% from 29% booked in September while FGN bonds’ contribution remained relatively flat at 13%. On the other hand, activities in Unsecured Placements/Takings increased by 1%, compared to 7% recorded in the previous month

FX Market

Turnover in the FX market for the month settled at $10.44bn; a 27% ($2.21bn) increase compared to the value recorded in September, with an average daily turnover of $0.44bn.

Member-Member trades increased by $1.04bn (140.3%), even as Member-Client trades which accounted for 83% of FX turnover, also went up by $1.17bn (15.6%) MoM.

FX Spot and Swap transactions increased by 30% ($2.03bn) and 19% ($0.26bn) MoM at turnovers of $8.82bn and $1.59bn respectively.

The CBN’s exchange rate remained flat at an average value of $/N195.99 in the month, while the inter-bank exchange rate traded at an average value of $/N197.68 as against an average of N197.63 in the previous month

Fixed Income Market (T.bills and FGN bonds)

The total value of Fixed Income consideration traded in the month of October was N7.95trn; an increase of N2.85trn or 55% MoM. T.bills turnover came to N6.14trn, accounting for 77% of total Fixed Income turnover; down from 83.09% recorded in the previous month.

On a YoY basis, turnover on T.bills and FGN bonds increased by N3.36trn (120%) and N0.82trn (82%) respectively.

Trading Intensity for T.bills and FGN bonds increased to 1.08 and 0.31 respectively compared with 0.71 and 0.16 recorded in the month of September.

Bullish sentiments prevailed in the Fixed Income market within the review period as yields pared downwards on all tenors.

On the average, the yield curve shifted downwards by 250 basis points with the short end of the curve recording the most drop in yields. Outstanding FGN bonds increased by N0.36bn (9%) to settle at N5.7trn from N5.34trn recorded in the previous month. This increase was due to the conversion of State loans to FGN bonds in the month.

Outstanding T.bills, comprising 49% CBN OMO bills and 51% Nigerian T.bills, settled at N5.70trn in the review period; N305.57bn or 5.09% less than the previous month’s value.

Net Debt Issuance in the month stood at N35.56bn compared with N2.40bn net issuance in the previous month. Total coupon paid on FGN bonds in the month amounted to N44.44bn.

Money Market (Repos/Buy-Backs and Unsecured Placements/Takings)

Turnover in the Secured market closed the month at N2.92trn; down N394.58bn or 12% from September. In the Unsecured market, turnover amounted to N1.14bn; an increase of N309.22bn or 37% MoM. OBB and O/N rates fell, recording averages of 2.59% and 3.04% respectively during the course of the month due to the sustained system liquidity.

Market Surveillance

Total number of RFQs in the Fixed Income market for the month of October amounted to 689,088, a 33,169 or 5% increase to the value recorded in September. RFQs constituted 91% of the total trading activities.

Total trades executed for FGN bonds’ RFQs was 909; 22% less than 1,159 recorded in September, While the total trades executed for T.bills went up to 14,220; an increase of 14% compared to 12,456 recorded in the previous month.

Orders filled in the FGN bonds segment witnessed an 82% increase (7,786) from the previous month’s count of 4,263 trades, while filled T.bills’ orders dropped 10% from 5,097 in September to 4,588 trades within the month.

Trades in the T.bills segment dominated the Fixed Income market activities, accounting for 96% of all activities. Of the total trades executed, 55% were in RFQs and 45% AFOs, translating to a total of 27,503 trades.