Bullish Run Sustained as Average Yield Declined 18bps WoW to 5.11%

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Monday, November 22, 2021 03:06 PM / by Afrinvest Research/ Header Image Credit: Grow from Acorns

 

Last week, the Nigerian Treasury Bills ("NT-Bills") secondary market maintained its bullish streak which was supported by the liquidity boost on Wednesday (which stood at N89.7bn long) as buying interest was recorded on all tenors.


As a result, average yields declined 18bps W-o-W from 5.29% to 5.11%, as investors cherry picked relatively attractive maturities across the curve. Specifically, the most demand was recorded on long-dated maturities which declined 35bps W-o-W, following demand on the 08-Sep-22 (-67bps), 25-Aug-22(-59bps) and 29-Sep-22 bills (-43bps). 


This week, the Central Bank of Nigeria ("CBN") is scheduled to conduct a Primary Market Auction ("PMA") on Wednesday, rolling over NT-Bills worth N118.73bn across the 91-(N3.5bn), 182- (N4.1bn) and 364-Day (N111.1bn) tenors. Thus, we expect quiet trading sessions at the start of the week as investors prepare to position at the PMA.

Please see below our T-bills expectations below:

 

TENOR

91- DAY

182 - DAY

364 - DAY 

Offer Amount(N)

3,537,952,000

4,118,561,000

111,071,723,000

Last Stop Rate

2.50%

3.50%

6.50%

Expected Stop Rate Range (%)

2.00% - 3.00%

3.00% -4.00%

6.00% - 7.00%


Given the expected improvement in liquidity levels (which stood at N237.13bn short as at Friday) from maturing instruments (PMA: N111.07bn, NT-Bills: N118.73bn and OMO bills: N33.00bn), we therefore advise investors to position in bills that may improve across the curve while using information on the yields from last week as a guide.
 

Please see indicative secondary market NT-Bills rates below:

Maturity

Tenor (Days)

Rate (%) p.a.

Yield (%) p.a.

10-Feb-22

80

2.65

2.67

31-Mar-22

129

4.15

4.21

9-Jun-22

199

5.30

5.46

14-Jul-22

234

5.95

6.19

25-Aug-22

276

6.74

7.10

9-Sep-22

291

7.04

7.46

Rates are valid till 01:45 pm today [22-Nov-21]
*Please note that the minimum subscription for NT-Bills is N
100,000.00

 

FGN Bonds Update: Mild Bearish Sentiments Recorded as Average Yield Increased 3bps W-o-W to 11.33%


The domestic bonds secondary market experienced slight sell-offs last week, as average yields increased 3bps W-o-W from 11.30% to 11.33%.

In more detail, average yield across short-tenored bonds remained flat while medium and long-tenored bonds expanded 5bps and 2bps W-o-W respectively, with the 23-Jul-30 (+11bps W-o-W) and 20-Nov-29 (+8bps W-o-W) instruments recording the most sell offs.

At the FGN Bond PMA issuance, the 10-Year and 30-Year reopened instruments were oversubscribed by 1.50% (N50.0bn offered vs. N50.8bn subscribed) and 239.42% (N50.0bn offered vs. N169.7bn subscribed) respectively, while the 20-Year re-opened instrument was undersubscribed by 6.62 % (N50.0bn offered vs. N46.69bn subscribed).


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Going into the week, we expect that the FGN bonds secondary market will maintain its bearish posture as investors continue to sell-off positions. Thus, we advise investors to take advantage of advancing yields along the curve.


Please see below FGN bonds secondary market rates:

Bond

Tenor (Years)

Yield (%)

Coupon (%)

Implied Price (N)

Apr-23

2

7.50

12.75

106.98

Mar-24

3

8.20

14.20

112.37

Mar-25

4

9.35

13.53

111.71

Jan-26

5

10.45

12.50

106.74

Mar-27

6

10.90

16.29

121.28

Feb-28

7

11.20

13.98

112.21

Apr-29

8

10.60

14.55

119.94

Jul-34

9

11.30

12.15

104.17

Mar-36

14

11.85

12.40

103.52

Apr-37

16

11.95

16.25

129.10

Apr-49

28

11.80

14.80

121.04

Mar-50

29

12.15

12.98

106.54

Rates are valid till 01:45 pm today [22-Nov-21]

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

Dangote Cement PLC Series 1, 2 and 3 Commercial Paper

We are pleased to inform you that the Series 1, 2 and 3 Commercial Paper issuance ("CP or the "Issuance"), under the recently established Dangote Cement PLC ("Dangote Cement") N150.0bn CP Issuance Programme is now open and scheduled to close on Wednesday, 24 November 2021.


Dangote Cement PLC is Africa's leading cement producer, with a combined installed capacity of 48.6Mta across its operations in 10 African countries. Dangote Cement operates a fully integrated "quarry-to-customer" business with activities covering manufacturing, sales and distribution of cement. Dangote Cement has a strong track record in the Nigerian debt capital markets, having successfully issued both short and long term debt.


Dangote Cement is assigned a AAA long-term rating by GCR and Aa3.ng long-term rating by Moody's due to its position as one of the largest cement manufacturers in Nigeria and Sub-Saharan Africa. Dangote Cement has also consistently reported robust operating and net profit margins compared to its peers in Sub-Saharan Africa and in other jurisdictions. The Issuer has adequate working capital, satisfactory cash flow, and a very experienced management team. The Issuer is the first Nigerian corporate to receive the AAA issuer rating by GCR.  


Please see below, the indicative terms of the proposed offer:

Proshare Nigeria Pvt. Ltd.

Offer Valid till 09:00 am on Wednesday (24-Nov-21)
*Please note that the minimum subscription for Commercial Papers is N5,000,000.00.


Proshare Nigeria Pvt. Ltd.

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  10. Ahead of Next NTB Auction Scheduled for November 10, 2021

 

 

 Proshare Nigeria Pvt. Ltd.

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