Fixed income OTC Market records N11.5trn turnover in one month

The over-the-counter (OTC) market for fixed income and currency recorded N11.48 trillion turnovers in the month of October, according to data released by FMDQ OTC Securities Exchange Plc on Wednesday.

The performance showed a drop of N3.06 trillion month-on-months and an increase of 1.42 per cent year-on-year(y/y). Activities in the Treasury Bills segment dominated the market, accounting for 43 per cent of total turnover, up from a contribution of 37 per cent recorded in the previous month.

Foreign exchange (FX) market contribution to turnover declined two per cent from the previous month to 17 per cent, recording a total of $9.84 billion. Secured market (Repos/Buy-Backs) transactions accounted for 19 per cent of total turnover in October, down 10 per cent from 29 per cent recorded in September while FGN bonds contribution remained relatively flat at 13 per cent.

On the other hand, activities in Unsecured Placements/Takings increased by one per cent, compared to seven per cent recorded in the previous month.

An analysis of the FX market showed that it settled at $7.97 billion, a 25.51 per cent drop in the value recorded in September, with an average daily turnover of $0.26 billion.

“While member-member trades increased $0.54 billion (56 per cent), member-client trades, which accounted for 80 per cent of FX turnover declined by 18 per cent month on month. FX Spot and Swap transactions declined by 24 per cent ($2.14 billion) and 29 per cent ($0.49 billion),” FMDQ OTC explained.

The exchange added that the total value of fixed income consideration traded in the month of October was N6.5trillion, an increase of N1.4 trillion 40 per cent month on month. Treasury bills turnover came to N4.96 trillion, accounting for 76.40 per cent of total fixed Income turnover, down from 83.09 per cent recorded in the previous month. On a YoY basis, turnover on Treasury bills and FGN bonds increased by N2.58 trillion (108 per cent) and N0.73 trillion (92 per cent) respectively.

Meanwhile, 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 N477.63 billion or nine per cent to settle at N5.81trillion, up from N5.34 trillion recorded in the previous month.  This increase was due to the conversion of State loans to FGN bonds in the month.

A further analysis of the data indicates that net debt issuance in the month stood at N35.56 billion, compared with N2.40 billion  net issuance in the previous month, while total coupon paid on FGN bonds in the month amounted to N44.44 billion.