Ahead of month end, FMDQ Securities Exchange has released its financial markets monthly report for April. The report shows upward lines in turnover month-on-month (MoM) and year-on-year (YoY). FMDQ markets turnover for April was N19.34trillion, representing a month-on-month (MoM) and year-on-year (YoY) increase of 27.57percent (N4.18trillion) and 19.53percent (N3.16trillion) from turnover in March 2022 and April 2021 respectively.
In the review period, total turnover for Spot and Derivatives Market was N15.86trillion and N3.48trillion respectively. Spot FX Market turnover was N3.81trillion ($9.13billion) in April 2022, representing a MoM increase of 39.61percent (N1.08trillion) from the turnover recorded in March 2022 (N2.73trillion).
Primary market
Sovereign Securities
The DMO sold T.bills valued at N289.09billion across its auctions in April 2022. Although, this exceeded the amount offered (N262.33billion) indicating the sustained demand for T.bills, it represents a 29.61percent (N121.63billion) MoM decrease in T.bills sold relative to March 2022 (N410.72billion).
In April 2022, the DMO reopened the 10Y and 20Y FGN Bonds and issued a new 10Y FGN Bond, with the total value of bonds sold equalling N348.58billion indicating its sustained demand, representing a 17.36percent (N51.57billion) MoM increase from March 2022 figures for the reopened issues. However, the CBN did not auction OMO Bills in the primary market in April 2022 compared to N170billion worth of OMO Bills sold in March 2022.
Non-Sovereign Securities
There were no corporate bonds listed on FMDQ Exchange in April 2022 compared to March 2022 during which corporate bonds worth N45.30billion were listed on the Exchange. Conversely, total value of CPs quoted on FMDQ Exchange in April 2022 was N120.95billion, representing a MoM increase of 67.85percent (N48.89billion) from the value of CPs quoted in March 2022 (N72.06billion). Issuers of CPs quoted in April 2022 were in Financial services (9), Agriculture (2), Health & Pharmaceuticals (1), Manufacturing (3) and Real Estate (2) sectors. In April 2022, total outstanding value for corporate bonds decreased by 0.14percent (N1.46billion) while CPs increased MoM by 9.63percent (N27.32billion) to N1.024trillion and N311.07billion respectively.
Secondary Market
Market turnover by products
Turnover in FMDQ markets for the month ended April 29, 2022 was N19.34trillion, representing a MoM and YoY increase of 27.57percent (N4.18trillion) and 19.53percent (N3.16trillion), respectively. Foreign Exchange (FX) and Money Market transactions were the highest contributors to the FMDQ markets turnover in April 2022, jointly accounting for 64.08percent of the total FMDQ markets turnover.
Spot Market
Total market turnover for all products traded in the spot market was N15.86trillion in April 2022, representing a MoM increase of 20.89percent (N2.74trillion) from the turnover recorded in March 2022. The MoM increase in total spot market turnover was driven by the 39.61percent (N1.08trillion) and 55.96percent (N1.83trillion) increase in FX market and money market (MM) turnover, respectively, which offset the 2.39percent (N170billion) decrease in fixed income (FI) market turnover in April 2022. The MoM decrease in FI market turnover was driven by the MoM decrease in bonds turnover by 33.71percent (N600billion). Although, the turnover for T.bills also decreased MoM by 7.56percent (N90billion), total bills turnover increased MoM by 7.85percent (N420billion) due to the combined MoM increase in OMO and CBN Special Bills turnover by 12.26percent (N510billion).
Spot FX Market
FX market turnover was N3.81trillion ($9.13billion) in April 2022, representing a MoM increase of 39.61percent (N1.08trillion) from the turnover recorded in March 2022 (N2.73trillion). In the FX Market, the Naira depreciated against the US Dollar, losing 0.24percent ($/N1.01) to close at an average of $/N417.55 in April 2022 from $/N416.54 recorded in March 2022. Further, exchange rate volatility increased in April 2022 compared to March 2022 as the Naira traded within an exchange rate range of $/N416.50 – $/N419.50 in April 2022 compared to $/N416.00 – $/N417 recorded in March 2022.
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Spot Fixed Income Market
FI market turnover was N6.95trillion in April 2022, representing a MoM decrease of 2.39percent (N170billion) from the turnover recorded in March 2022 (N7.12trillion). In April 2022, CBN Special Bills were the most traded FI securities, with a 23.23percent (N230billion) MoM increase in turnover to N1.22trillion. Similarly, OMO Bills turnover increased MoM by 8.83percent (N280billlion). Consequently, trading intensity (TI) for OMO bills increased by 14basis points (bps) to 4.05 from 3.91 in March 2022, while TI for FGN Bonds and T.bills declined by 3bps and 4bps to 0.25 and 0.09, respectively. T.bills within the >6M – 12M tenor range were the most traded sovereign debt securities, accounting for 35.72percent (N800billion) of turnover for sovereign debt securities, while FGN Bonds with term-to-maturity of >10Y – 15Y were the most traded long-term sovereign debt securities, accounting for 13.66percent (N310billion) of total turnover for sovereign debt securities. In April 2022, the yield spread between the 3M and 30Y sovereign debt securities decreased by 1.08ppts to 10.33ppts, indicating a flattening of the sovereign yield curve. Real (inflation-adjusted) yields remained negative across the yield curve in April 2022.
Spot Market – (Money Market)
Total turnover in the Money Market segment increased MoM by 55.96percent (N1.83trillion) to N5.10trillion in April 2022. The MoM increase was driven by the 55.27percent (N1.73trillion) and 71.43percent (N100billion) increase in Repos/Buy-backs and Unsecured Placement/Takings turnover, respectively. The average overnight (O/N) rate and Open Repos (OPR) rate (secured lending rate) increased by 1.73ppts and 1.72ppts respectively, to close at an average of 8.77percent and 8.25percent in April 2022.
Derivatives Market
Derivatives Market – (FX Market)
Total turnover in the FX market segment was N3.48trillion ($8.34billion), representing a MoM increase of 70.49percent (N1.44trillion) in April 2022. The MoM increase was driven by the 157.65percent (N1.34trillion), 0.39percent (N8.63billion) and 311.43percent (N90billion) increase in FX Swaps, FX Forwards and FX Futures to N2.19trillion, N1.16trillion and N120billion, respectively.
Naira-settled OTC FX Futures Market
In the OTC FX Futures market, the near month contract (NGUS APR 27, 2022) expired and open positions with a total notional value (NV) of $0.43billion were settled. A far month (60M) contract, NGUS APR 28, 2027 was introduced at a Futures rate of $/N626.97; which has been the Futures price for the far month contract for four (4) consecutive months. The total NV of open OTC FX Futures contracts as at April 29, 2022, stood at circa $3.72billion representing a MoM and YoY decrease of 9.02percent ($0.37billion) and 19.62percent ($0.91billion) from its value as at March 31, 2022 and April 30, 2021, respectively.
The total NV of OTC FX Futures Contracts traded decreased by 59.82percent ($0.10billion) to $0.06billion in April 2022 from $0.16illion recorded in March 2022. In April 2022, the hedge concentration in the OTC FX Futures Market was within the 0 – 6M maturity bucket, accounting for 71percent ($0.05billion) of the total traded values across four (4) deals of the six (6) deals conducted in the period under review.
The NV of OTC FX Futures Contracts traded across short-dated contracts (0 – 12M) decreased by 25percent ($0.02billion) to $0.06billion while the NV of OTC FX Futures Contracts traded across long-dated contracts (13 – 60M) decreased by 100percent ($0.02bn) as there were no trades in this category for the period under review.
Average OTC FX Futures Contract rates in April 2022 remained constant across all tenor buckets when compared to the previous month of March. In contrast, the rates of Deliverable Forwards in April 2022 varied across all tenor buckets when compared to the rates in March 2022. In the Deliverable Forwards market, the highest appreciation in rate was recorded on the 6M contract while the highest depreciation in the rate was recorded in the 2M contract.
