Average NT-Bills Yield Expands by 8bps to 6.48% WoW on Tightened Liquidity Levels

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Monday, July 12, 2021 / 02:04 PM / by Afrinvest Research / Header Image Credit: Pexels


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Amidst the pressured liquidity levels (dipping to N47.46bn short on Thursday), the Nigerian Treasury Bills ("NT-Bills") secondary market turned bearish last week, with average yields across the curve advancing 8bps W-o-W to close at 6.48%. Specifically, the most sell-offs were recorded at the long-dated maturities which expanded 18bps W-o-W, following sell pressures in the 31-Mar-22 (+83bps) and 28-Apr-22 bills (+46bps).

 

This week, the Apex bank would be rolling over maturing NT-bills worth N109.43bn at the Primary Market Auction ("PMA") on Wednesday, across the 91- (N12.46bn), 182- (N25.37bn), and 364-Day (N71.60bn) tenors.

 

Please see below our PMA expectations:

Tenor

91-Day

182-Day

364-Day

Offer Amount (₦)

12,459,707,000.00

25,372,322,000.00

71,598,126,000.00

Last Stop Rate (%)

2.50

3.50

9.15

Expected Stop Rate Range (%)

2.50 - 2.80

3.50- 3.60

9.10-9.65

*Please note that the minimum subscription for the NT-Bills PMA is  N50,001,000.00

 

Given the expected improvement in liquidity levels from maturing instruments (NT-Bills: N109.43bn, OMO bills: N50.00bn and the Jul-21 bond maturity: N400.46bn) and coupon payments (worth N40.68bn), we anticipate that the bearish trend in the secondary market will dwindle towards the end of this week from possible lost PMA bids, while investors' focus shifts to the PMA holding mid-week. We therefore advise investors to position in bills that have recorded the most expansions in yields across the curve.


Please see the indicative secondary market NT-Bills rates below:

Maturity

Tenor (Days)

Rate (%) p.a.

Yield (%) p.a.

16-Sep-21

66

2.55

2.56

14-Oct-21

94

3.30

3.33

25-Nov-21

136

4.35

4.42

31-Mar-22

262

5.60

5.83

28-Apr-22

290

5.94

6.23

26-May-22

318

6.96

7.41

09-Jun-22

332

7.16

7.66

Rates are valid till 01:45 pm today (12-Jul-21)

*Please note that the minimum subscription for NT-Bills is N100,000.00



FGN Bonds Update: Average Yield Inched 9bps Higher WoW to 11.66%

 
The FGN Bond space witnessed a similar bearish posture last week, as the average yield across the curve inched 9bps higher W-o-W to settle at 11.66% (from 11.57% the previous week), following exits recorded at the 26-Apr-29 (+31bps W-o-W) and 22-May-29 (+29bps W-o-W) maturities.


Please see indicative secondary market bonds rates below:

Bond

Tenor (Years)

Yield (%)

Coupon (%)

Implied Price (N)

Apr-23

2

             9.50

            12.75

                  105.21

Mar-24

3

           10.65

            14.20

                  108.03

Mar-25

4

           10.75

            13.53

                  108.26

Jan-26

5

           11.30

            12.50

                  104.16

Mar-27

6

           11.50

            16.29

                  119.52

Feb-28

7

           11.50

            13.98

                  111.24

Jul-34

13

           11.55

            12.15

                  103.98

Mar-36

15

           12.10

            12.40

                  102.00

Apr-37

16

           12.05

            16.25

                  129.29

Apr-49

28

           12.15

            14.80

                  120.94

Rates are valid till 01:45 pm today (12-Jul-21) 

*Please note that the minimum subscription for FGN Bonds is N20,000,000.00


This week, we expect the upcoming FGN bond maturities, coupon payments, and signals from the June 2021 CPI data which is scheduled for release by the National Bureau of Statistics ("NBS") to shape investors' sentiments in the secondary market. Thus, we envisage a possible reversal into the bull territory at the secondary market given anticipated buoyant liquidity levels and advise investors to position in maturities which have recorded improved yields along the curve.


Proshare Nigeria Pvt. Ltd.

 

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Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

 

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