Over-The-Counter (OTC) market summary at FMDQ Securities Exchange shows turnover of transactions carried out in the Fixed Income and Currency Markets (FIC) for the month of January 2016 settled at N7.35trillion.
This figure represents N80.23billion (1.08percent) decrease over the value recorded in December 2015 and a N3.71trillion (33.56percent) drop year-on-year (YoY).
Activities in the Foreign Exchange (FX) market contributed 28.21percent to the turnover, down 7percent from the value recorded in December, whilst Treasury Bills (T.bills) transactions contributed 28.16percent to the total turnover, up 2percent from the preceding month.
Secured market transactions (Repos / Buy-Backs) accounted for 24.30percent of total turnover in the month, with FGN bonds’ contribution settling at 15.79percent. Activities in Unsecured Placements/Takings accounted for 3.26percent of total turnover.
Transactions in the FX market settled at $8.92billion, $1.97billion (18.13percent) decrease compared to the value traded in December, with an average daily turnover of $0.45billion.
On a YoY basis, FX transactions recorded a $11.26bn (43.19percent) decline, due mostly to the change in Interbank trading style to order based. Member-Member trades increased by $78.68mm (6.90percent) as a result of an increase in spot transactions and settled at $1.22bn.
On the other hand, transactions in the Member-Client trade category recorded a decline of $2.05bn (21.06percent) to end the month at $7.70bn. On aggregate, spot and swaps transactions both declined by $1.37bn (15.70percent) and $0.61bn (28.93percent) in the month as compared to values recorded in December 2015.
The CBN’s exchange rate remained flat at $/N196.50 in the month whilst the inter-bank exchange rate traded at an average rate of $/N198.90, with a peak and trough of $/N199.40 and $/N197.23 respectively
The Fixed Income Market experienced increased activity in the month under review recording a turnover of N3.23trn, N0.61bn (23.49percent) increase from the preceding month. Accounting for 64.07percent of Fixed Income turnover, T.bills transactions amounted to N2.07trn, N117.73bn (6percent) higher than the amount recorded in December.
Turnover of FGN bonds settled at N1.16trn, N496.49bn (74.8percent) higher when compared with the previous month. Average outstanding values of T.bills and FGN bonds were N5.36trn and N6.02 respectively with trading intensities of 0.39 and 0.19. These values, when compared with 0.38 and 0.11 recorded in December, indicates increased activity levels especially in the FGN bond market.
The DMO, in January, issued a new 10-year bond into the Nigerian market. The bond, 12.50% FGN JAN 2026, sold N45.84bn at auction with the coupon being set at 12.50percent. Net Debt Issuance by the government in the month of January was negative at N59.64bn, driven mainly by N145.48bn coupon paid in the month.
Although little volatility was experienced in the review period, yields trended upwards 98bps on the average with 1month yield experiencing the highest change.
The yield curve was upward sloping at the end of the month. Short-tenor yields averaged 6.04%, mid-tenor – 11.20% and long-tenor 12.07%
Activities in the secured markets (Repos/Buy-backs) settled at N1.79trn, N82.20bn (4.40percent) below the value recorded in December. On a YoY basis, the value recorded a drop of N1.04trn (36.92percent). Unsecured Placements/Takings declined by N112.19bn (31.90percent) to settle at N239.54bn for the month.
This translates to a decline of N784.04bn (69.45) YoY. Liquidity prevailed in the banking sector as rates remained low in the month with OBB and O/N averaging 2.14percent and 2.59percent respectively
In the month of January, a total of 401,515 trades were initiated resulting in an execution rate of 2.40percent. As expected, Request-for-Quotes (RFQs) dominated activities in the month, accounting for 94.15percent of total trades. Execution rate on RFQs however was 1.62percent compared with 14.92percent recorded for Anonymous Firm Order (AFOs).
Although AFOs initiated for T.bills declined 15.58percent, the execution rate increased 108.54percent, signifying renowned activities in the segment. FGN bonds recorded an increase of 44.97percent in total AFOs with an attendant 65.58percent in executed trades.
