Average Yield on NT-Bills Dips 15bps to 1.6%, FGN Bond PMA Holds this Wednesday

Proshare

Monday, September 21, 2020 / 01:55 PM / By Afrinvest Research / Header Image Credit: Invest Small

 

Proshare Nigeria Pvt. Ltd.


The Nigerian Treasury Bills ("NT-Bills") secondary market witnessed another bullish run last week, due to sustained demand amid decent liquidity levels (N216.1bn long on Friday). Although the week kicked off on a calm note, as investors anticipated the NT-Bills Primary Market Auction ("PMA"), activities picked up by Thursday following inflows from Open Market Operation ("OMO") maturities (N350.0bn) and unfilled PMA bids (N45.4bn) that filtered into the secondary market. Consequently, average yield dipped 15bps W-o-W to close at 1.6% on Friday.


In more detail, strong demand was observed on the short and intermediate bills down 48bps and 9bps W-o-W respectively, with the 01-Oct-20 (-55bps), 15-Oct-20 (-54bps) and 29-Oct-20 (-52bps) bills recording the most buying interests. Conversely, the long-term instruments advanced 8bps W-o-W following slight sell offs.


At the NT-Bills PMA, the CBN offered N158.8bn worth of bills across the 91- Day, 182- Day and 364-Day tenors which met a 1.3x bid-to-cover ratio (total demand of N204.2bn). Stop rates on the short- and medium-term bills declined by 1bps and 5bps respectively, while the stop rate on the long- term bills remained unchanged.


Please see a detailed summary of the NT-Bills PMA in the table below:

Auction Date

16-Sep-20

16-Sep-20

16-Sep-20

Allotment / Issue Date

17-Sep-20

17-Sep-20

17-Sep-20

Tenor

91-Day

182-Day

364-Day

Offer Amount (bn N)

2,000,000,000

8,385,196,000

148,361,351,000

Total Subscription (bn N)

3,987,396,000

15,470,858,000

184,712,172,000

Allotment (bn N)

 2,000,000,000

8,385,196,000

148,361,351,000

Range of Bid Rates (%)

1.0000 - 1.3500

1.2000 - 2.0100

2.2990 - 12.8000

Stop Rates (%)

1.0900

1.5000

3.0500

Previous Stop Rates (%)

1.1000

1.5500

3.0500

Bid-to-Cover Ratio

2.0x

1.8x

1.2x

Allotment Ratio

0.5x

0.5x

0.8x

 

The CBN also conducted an OMO auction on Thursday to mop up excess liquidity in the system. A total amount of N70.0bn was offered and sold across the 138-, 173-and 355-Day instruments. The offer of N70.0bn (20% less than the N350.0bn that matured) was met with a total subscription of N196.5bn which translated to a 2.8x bid-to-cover ratio. All tenors were oversubscribed and average stop rates moderated by 1bps to 7.1%.


This week, we expect the bullish momentum to be sustained as anticipated inflows from maturing OMO bills (N300.0bn) and bond coupon payments (c. N18.1bn) will likely bolster system liquidity. Investors are advised to cherry pick attractive instruments across the yield curve.


Please see indicative secondary market NT-Bills rates below:

Maturity

Tenor (Days)

Rate (%) p.a.

Yield (%) p.a.

29-Oct-20

38

2.60

                     2.61

14-Jan-21

115

3.55

                     3.59

28-Apr-21

219

4.00

                     4.10

10-Jun-21

262

4.35

                     4.49

15-Jul-21

297

4.69

                     4.88

Rates are valid till 01:45pm today (21-Sep-2020)

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


FGN Bonds Update: FGN Bond Auction Holds this Wednesday; Average Yield Declines to 7.6%

In line with expectations, the bonds market also traded with bullish sentiments spread across the yield curve as local investors sought to re-invest their bond coupon payments (c. N142.1bn) and OMO maturities. Demand further persisted in spite of the release of Consumer Price Index  data for the month of August which showed a rise in inflation (12th consecutive increase and highest in 29 months) to 13.2% from 12.8% in July. As a result, average yield across all tenors shed 12bps W-o-W to settle at 7.6%.


Strong buying interests were observed across the short-, mid- and long-term bonds while the mid-term bonds recorded the most bids with the APR-29, MAY-29 and NOV-28 bonds contracting by 48bps, 40bps and 38bps respectively W-o-W.


Today, the Monetary Policy Committee ("MPC") of the Apex bank is scheduled to meet. In light of the current inflationary pressures, we expect the Monetary Policy Rate ("MPR") to be kept unchanged in a bid to moderate inflation and achieve price stability. Nevertheless, we do not rule out the possibility of the CBN employing its unorthodox policy measures.


Looking ahead, the Debt Management Office ("DMO") is slated to conduct a bond PMA on Wednesday. A total of N145.0bn is being offered across four re-opening bonds. Please see more detail in the table below:


Please see more detail in the table below:

BOND

12.50% JAN 2026

12.50% MAR 2035

9.80%JUL 2045

12.50% MAR 2050

10-Yr Re-opening

15-Yr Re-opening

25-Yr Re-opening

30-Yr Re-opening

Term to Maturity

5 Years, 4 months

14 Years, 6 months

24 Years, 10 months

29 Years, 6 months

Offer Amount (bn N)

25,000,000,000

40,000,000,000

40,000,000,000

40,000,000,000

Previous Stop Rates

6.7000%

9.3500%

9.7500%

9.9000%

 

  

We expect a quiet trading session today as investors trade cautiously ahead of anticipated supplies at the bond auction. Nevertheless, market activities should pick up towards the end of the week as improved system liquidity continues to fuel demand in this space.


Please see indicative secondary market bond rates below:

Bond

Tenor (Years)

Yield (%)

Coupon (%)

Implied Price

Jan-22

2

                       2.10

16.39

118.87

Apr-23

3

                       2.20

12.75

126.49

Mar-24

3

                       2.20

14.20

140.00

Mar-25

5

                       3.40

13.53

141.95

Jan-26

5

                       2.20

12.50

151.55

Mar-27

6

                       3.40

16.29

174.48

Feb-28

7

                       5.20

13.98

153.48

Apr-29

9

                       6.20

14.55

154.97

Jul-34

14

                       6.20

12.15

154.67

Mar-36

15

                       6.40

12.40

158.42

Apr-37

16

                       8.20

16.25

172.23

Apr-49

29

                       8.40

14.80

168.92

Rates are valid till 01:45pm today (21-Sep-2020)

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


Proshare Nigeria Pvt. Ltd. 


Related News

  1. Anchoria Fixed Income Monitor: Heavy Market Liquidity Pressures Rates Downwards
  2. DMO Steadies Rates for NTBs at PMA Today as Demand for Fixed Income Papers Continues Unabated
  3. Invest in FGN Monthly Bond Auction - September 2020
  4. Fixed Income Markets Shrug Off Increased Inflation Figures
  5. Treasury Bill Auction Holds Wednesday September 16th, 2020
  6. FMDQ Admits Mixta Real Estate Plc and CardinalStone Partners Limited Commercial Papers
  7. Average Yield Declines 24bps W-o-W to 1.7% on Strong Demand from Investors at PMA
  8. Anchoria Fixed Income Monitor: Bullish Sentiment in the Bond Market
  9. A Manageable Rise in the FGN's Domestic Debt
  10. CBN OMO Auction Rates Remain Unchanged Despite Heavy Demand
  11. Nigeria's Public Debt Stock Stood At N31.01trn As of June 2020

Proshare Nigeria Pvt. Ltd.
READ MORE:
Related News
SCROLL TO TOP