Average Yield Remained Unchanged at 4.74% WoW Amidst Quiet Trading Sessions

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Tuesday, May 04, 2021 / 01:58 PM / by Afrinvest Research/ Header Image Credit: Voto en Blanco

 

Last week, trading in the Nigerian Treasury Bills ("NT-Bills") secondary market was relatively quiet as liquidity levels remained tight (N274.3bn short as at Monday, 26th April, 2021) and as investors stayed on side-lines, awaiting the Primary market Auction ("PMA") that held on Wednesday, 28th April, 2021.

 

Consequently, average yield closed flat at 4.74% despite the bond coupon payment inflow worth N53.0bn which was received during the week. The 24-Feb-22, 10-Mar-22 and 17-Mar-22 maturities witnessed mild buying interest, shedding an insignificant 1bp apiece W-o-W while other instruments across the curve traded relatively flat.


At Wednesday's PMA, the Central Bank of Nigeria ("CBN) rolled over a total of N88.0bn across the 91-, 182-, and 364-Day tenors, which was met with strong demand, recording a total subscription of N242.9bn. In addition, the Apex bank sold less than it offered on the 91-Day tenor which had a 1.5x bid-to-cover ratio while most demand was recorded on the 364-day tenor with a 1.9x bid-to-cover ratio. Furthermore, stop rates were maintained at the short- and medium-term offers, while the long-term offer expanded to 9.75% (from 9.0% at the last auction).


Please see below details of the PMA:

Auction Date

28-Apr-21

28-Apr-21

28-Apr-21

Allotment / Issue Date

29-Apr-21

29-Apr-21

29-Apr-21

Tenor

(91-Day)

(182-Day)

(364-Day)

Offer (N)

11,388,756,000

6,000,000,000

71,074,821,000

Subscription (N)

10,533,524,000

9,052,002,000

223,354,416,000

Allotment (N)

7,193,228,000

6,000,000,000

116,268,774,000

Range of Bid Rates (%)

1.9900-10.0000

3.4900-12.0000

8.8943-15.0000

Stop Rates (%)

2.00

3.50

9.75

Previous Stop Rates (%)

2.00

3.50

9.00

Subscription Ratio

0.9x

1.5x

3.1x

Bid-to-cover ratio

1.46x

1.51x

1.92x

Allotment Ratio

0.7x

0.7x

0.5x


This week, we expect to see more demand in the NT-Bills secondary market given strengthened liquidity levels N208.4bn (positive as at Friday, 30th April, 2021), and as investors try to place unmet bids from last week's PMA. Thus, we advise investors to continue to position in relatively attractive bills across the curve while also remaining alert for possible corporate offerings.


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

Maturity

Tenor (Days)

Rate (%) p.a.

Yield (%) p.a.

26-Aug-21

114

2.10

2.11

9-Sep-21

128

2.55

2.57

28-Oct-21

177

3.85

3.92

11-Nov-21

191

4.05

4.14

10-Feb-22

282

5.14

5.35

Rates are valid till 01:45 pm today (04-May-21)
*Please note that the minimum subscription for T-Bills is N100,000.00


FGN Bonds Update: Bearish Run Sustained for Another Week as Average Yield Advances 28bps W-o-W to 11.93%.


The FGN Bonds secondary market resumed last week on a calm note, however, mild sell-offs continued to push yields higher as the week progressed, furthering its bearish run for another week. Consequently, average yield across all maturities advanced 28bps W-o-W to settle at 11.93% from 11.45% the previous week.


In more detail, the average yield on short- tenured instruments expanded by 58bps to close at 9.07% W-o-W, while the mid- and long-term bonds expanded 7bps and 35bps W-o-W respectively. Particularly, the short-term maturities such as 27-Apr-23 and 14-Mar-24 witnessed the most sell-offs advancing 155bps and 104bps W-o-W respectively.


Going into the week, we expect the calm albeit bullish trading sessions to continue, due to improved liquidity level of N208.4bn (positive as at Friday). We therefore advise investors to take advantage of maturities with improved yields across the curve, particularly at the short- and medium-end of the curve.


Please see indicative secondary market bonds rates below:

Bond

Tenor (Years)

Yield (%)

Coupon (%)

Implied Price (N)

Apr-23

2

9.80

12.75

105.19

Mar-24

3

9.80

14.20

110.71

Mar-25

4

9.95

13.53

111.28

Jan-26

5

11.80

12.50

102.44

Mar-27

6

11.95

16.29

117.89

Feb-28

7

11.95

13.98

109.23

Jul-34

13

12.90

12.15

95.25

Mar-36

15

12.90

12.40

96.69

Apr-37

16

12.90

16.25

122.41

Apr-49

28

13.35

14.80

110.56

Rates are valid till 01:45 pm today (04-May-21) 
*Please note that the minimum subscription for FGN Bonds is N20,000,000.00


Proshare Nigeria Pvt. Ltd.


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