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FMDQ Exchange records N40.85bn worth of quoted Commercial Papers in June

The total value of Commercial Papers (CPs) quoted on FMDQ Exchange in June was N40.85billion, representing a month-on-month (MoM) decrease of 75.46percent (N125.63billion) from the value of CPs quoted in May.

The quoted CPs according to the Exchange’s recently released financial markets monthly report were issued by institutions from various sectors including Financial Services (2), Consumer Goods (2), Commodities Trading (2), Agriculture (1) and Real Estate (1), sectors.

In the same review month, the total value of corporate bonds listed on FMDQ Exchange was N38billion, representing a 280percent (N28billion) MoM increase from the value of corporate bonds listed in May.

Corporate bond listing emanated from two (2) issuers in the Quick Service Restaurant and Agricultural sectors, the report shows.

In June, total value of outstanding corporate bonds and CPs increased MoM by 3.49percent (N35.10billion) and 7.06percent (N34.19billion) to N1.039trillion and N518.80billion respectively.

Secondary market turnover on FMDQ Exchange in June was N18.20trillion, representing a MoM increase of 18.31percent (N2.82trillion) and a YoY increase of 18.87percent (N2.89trillion), respectively.

Money Market and FX transactions dominated secondary market activity in June, with both jointly accounting for 59.51percent of the total secondary market turnover.

Total spot market turnover for all products traded in the secondary market was N16.19trillion in June, representing a MoM increase of 20.10percent (N2.71trillion) from the turnover recorded in May.

The MoM increase in total spot market turnover was driven mainly by the 64.23percent (N2.28trillion) increase in money market (MM) turnover, as well as the 8.30percent (N230billion) and 2.79percent (N200billion) increases in FX and FI market segments turnover, respectively.

The increase in MM turnover was driven mainly by the MoM increase in Repos/Buy-Backs by 62.79percent (N2.19trillion), while the MoM uptick in fixed income (FI) market segment turnover was driven by MoM increases in T.Bills, CBN Special Bills and Other Bonds turnover by a combined 25.68percent (N1.03trillion), despite the 36.99percent (N800billion) and 2.84percent (N30billion) decrease in OMO bills and FGN Bonds respectively.

FI market turnover was N7.37trillion in June, representing a MoM increase of 2.79percent (N200billion) from the turnover recorded in May (N7.17trillion). The MoM increase was driven by the increase in T.bills and CBN Special Bills turnover by N1.07trillion, and offsetting the MoM decrease in turnover for OMO Bills and FGN Bonds.

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CBN Special Bills were the most traded FI securities, accounting for 45.05percent of the total FI turnover in June. T.bills within the >6M – 12M tenor range were the most traded sovereign debt securities, accounting for 32.31percent (N860billion) of turnover for sovereign debt securities, while FGN Bonds with term-to-maturity of >12M – 3Y were the most traded long-term sovereign debt securities, accounting for 6.37percent (N170billion) of total turnover for sovereign debt securities.

In June, the yield spread between the 3M and 30Y sovereign debt securities decreased by 2.59 percentage points (ppts) to 9.11ppts, indicating a flattening of the sovereign yield curve. Real (inflation-adjusted) yields remained negative across the yield curve in June 2022, the report further showed.

Total turnover in the Money Market segment increased MoM by 64.26percent (N2.28trillion) to N5.83trillion in June 2022. The MoM increase was driven by the 143.04percent (N90billion) and 62.79percent (N2.19trillion) increase in Unsecured Placement/Takings and Repos/Buy-backs turnover, respectively. The average Overnight (O/N) rate and Open Repos (OPR) rate (secured lending rate) increased by 1.87ppts and 1.93ppts respectively, to close at an average of 11.60percent and 11.28percent in June 2022.

Total turnover in the FX derivatives market segment was N2.01trillion ($4.79billion), representing a MoM increase of 5.51percent (N100billion) in June 2022.

The MoM increase in the FX derivatives turnover was driven by the 162.85percent (N170billion) increase in FX Swaps, offsetting the 58.54percent (N60billion) and 4.31percent (N10billion) decrease in FX Futures and FX Forwards, respectively.

In the OTC FX Futures market, the near month contract (NGUS JUN 29, 2022) expired and open positions with a total notional value (NV) of $310million were settled.

A far month (60M) contract, NGUS JUN 30 2027 was introduced at a Futures rate of $/N632.60 representing the first increase in the far month contract for OTC FX Futures after being retained at $/N626.97 for six (6) consecutive months.

The total NV of open OTC FX Futures contracts as at June 30 stood at circa $3.77billion, representing a MoM increase of 0.27percent ($10million) and a YoY decrease of 11.29percent ($480million) from its value as at May 31, 2022 and June 30, 2021, respectively.

The total NV of OTC FX Futures Contracts traded decreased by 61.33percent ($420billion) to $260million in June 2022 from $680million recorded in May 2022. In June 2022, the hedge concentration in the OTC FX Futures Market was within the 7 – 12M maturity bucket, accounting for 80.10percent ($210million) of the total traded values across thirteen (15) of the twenty-five (25) deals conducted in the period under review.

The NV of OTC FX Futures Contracts traded across short-dated contracts (0 – 12M) increased by 44.39percent ($70million) to $220million while the NV of OTC FX Futures Contracts traded across long-dated contracts (13 – 60M) decreased by 92.47percent ($490million) to $40million.

Average OTC FX Futures Contract rates and Deliverable Forwards rates in June 2022 increased across all tenor buckets when compared to the previous month of May. The Average OTC FX Futures Contract rates on the 55 – 60M bucket recorded the highest depreciation. Likewise, the highest depreciation in the Deliverable Forwards market was recorded on the farther term – 12M contract.

The DMO had in June sold T.bills valued at N544.87billion across its auctions. It exceeded the amount offered (N383.29billion) indicating the sustained demand for T.bills, and also represents a 75percent (N233.52billion) MoM increase in T.bills sold relative to May (N311.35billion).

Similarly, the DMO reopened two (2) 10Y and one (1) 20Y FGN Bond issues in June, selling FGN Bonds worth N226.12billion (exceeding the total amount of FGN Bonds offered by N1.12billion). However, total value of FGN Bond issued decreased MoM by 40.24percent (N152.29billion) relative to May figures. In June, the CBN issued OMO bills worth N40billion to banks and eligible investors.

The report shows that FX spot market turnover was N2.99trillion ($7.10billion) in June, representing a MoM increase of 8.30percent (N230billion) from the turnover recorded in May (N2.76trillion). In the FX Market, the Naira depreciated against the US Dollar, with the exchange rate ($/N) increasing by 0.44percent ($/N1.83) to close at an average of $/N420.98 in June from $/N419.15 recorded in May.

Furthermore, exchange rate volatility increased in June compared to May as the Naira traded within an exchange rate range of $/N419-$/N425.50 in June 2022 compared to $/N417 -$/N421.50 recorded in May 2022.

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