Bonds & Fixed Income | |
Bonds & Fixed Income | |
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Monday, August 13, 2018 / 4:30PM / Afrinvest
The T-Bills market was largely quiet last week on the back of
sell offs particularly at the mid-long end of the curve as investors
anticipated an OMO auction with more attractive yields by the Apex bank.
Consequently, average rates across tenors inched 22bps higher to close the week
at 11.5%. The bearish sentiment was further strengthened at mid-week as
investors reacted to the negative headlines of domestic political proceedings.
As a result, yields advanced across the short, medium and long-term tenors particularly
the 23-Aug-18 (+78bps), 25-Oct-18 (+38bps) and 03-Jan-18 (+14bps).
In its customary quest to mop up excess system liquidity (N641.0bn as at
Thursday), the CBN conducted an OMO auction offering N450.0bn for the 91
and 203-day tenors respectively. While the shorter end was 72.6%
under-subscribed (N100.0bn offered vs. N27.4bn
subscription), the longer tenor was 99.9% subscribed (N350.0bn offered
vs. N349.6bn subscription) as a result of a better yield on the 203-day
maturity compared to yields on the long-term T-Bills secondary market
instruments.
Please see indicative rates for today below:
Maturity |
Tenor
(Days) |
Rate
(%) p.a. |
Yield
(%) p.a. |
20-Sep-18 |
38 |
8.10 |
8.17 |
01-Nov-18 |
80 |
9.40 |
9.60 |
13-Dec-18 |
122 |
10.90 |
11.31 |
31-Jan-19 |
171 |
11.10 |
11.71 |
21-Feb-19 |
192 |
11.20 |
11.90 |
OMO
Auction |
203 |
11.30 |
12.09 |
A Primary Market Auction (‘’PMA”) is slated to hold on Wednesday with the CBN
offering N33.4bn across the 91, 182 and 362-day maturities. In addition
to the maturing T-Bills of N33.4bn. Additionally, an injection of N440.0bn
from OMO maturities is expected to boost system liquidity. This week we expect
to see more activities in the T-Bills market particularly at the longer-end of
the curve at the PMA and anticipate an excess system liquidity mop-up by the
Apex bank towards the end of the week.
Please see our expectations for the PMA below:
Tenor |
Amount on Offer |
Previous Stop Rate |
Expected Stop Rate |
91 days |
|
10.0000% |
10.0000%-10.1000% |
182 days |
|
10.4000% |
10.3000%-10.3500% |
364 days |
|
11.3000% |
11.2000%-11.4000% |
FGN Bonds Market Update: Off-Shore Investors Sell-off amidst Political Tensions, Bond Auction Slated for Wednesday
Last week, the bullish sentiment in the domestic bonds market was reversed as investors sold off their positions on the back of negative political headlines towards mid-week. Major sell-offs were witnessed on the 2027 (+48bps) and 2036 (+25bps) instruments Consequently, average yields across all instruments advanced 27bps to close at 13.77%.
Due to the Muslim holidays, the DMO moved the bonds auction previously slated
for August 22nd forward to August 15th with a total of N90.0bn
on offer- N25.0bn apiece of the APR-2023 and MAR-2025 maturities and N40.0bn
of the FEB-2028 maturity.
Please see indicative bond rates for today below:
Bond |
Tenor
(Years) |
Yield
(%) |
Coupon
(%) |
Implied
Price (N) |
Feb-20 |
2 |
13.15 |
15.54 |
103.16 |
Jul-21 |
3 |
13.70 |
14.50 |
101.84 |
Jan-22 |
4 |
13.80 |
16.39 |
106.91 |
Mar-24 |
6 |
13.95 |
14.20 |
100.91 |
Jan-26 |
8 |
14.45 |
12.50 |
91.26 |
Mar-27 |
9 |
14.40 |
16.29 |
109.11 |
Jul-34 |
16 |
14.50 |
12.15 |
85.51 |
Mar-36 |
18 |
14.35 |
12.40 |
87.56 |
Apr-37 |
19 |
14.40 |
16.25 |
111.83 |
This week, we expect to see bargain hunting by investors particularly on
instruments with lower prices and higher yields and also anticipate a bullish
performance at the FGN bonds auction slated for Wednesday (where the DMO will
re-issue 12.75% FGN APR 2023, 13.53% FGN MAR 2025 and 13.98% FGN FEB 2028) on
the back of a boost in system liquidity.
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5. Bond Market
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7. Bond Yields
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8. Sterling Bank
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10. Expected System
Liquidity Boost to Sustain Bullish Performance
11. August 2018 FGN
Savings Bonds Offer for Subscription
12. Fixed Income
Market Monitor- Average Bond Yield Fell by 3bps to Close the Week At 13.97%
13. Bond Yields Tick
Higher as Offshore Players selloff on the Mid to Long End
14. Lafarge Africa
Plc Series 7 Commercial Paper Closes Today
15. CBN Mops up
Excess OMO Inflows as SLF Window hits a Record Zero Patronage
16. Lafarge Africa
Plc Series 7 Commercial Paper Now Open
17. PMA Rates Trend
lower as Market Players Oversubscribe the 1-yr bill by 175%
18. Funding Rates
expected to Trend Lower as c.N375bn FAAC Inflows hit the System
19. Nigeria’s Debt
Composition is Now External 30% Domestic 70%- Pat Oniha, DG DMO