Bonds & Fixed Income | |
Bonds & Fixed Income | |
1313 VIEWS | |
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PROSHARE | |
PROSHARE |
Monday,
May 18, 2020 / 12:32 PM / By Afrinvest Research / Header Image Credit: Coindesk
The
Nigerian Treasury Bills ("NT-Bills") secondary market kicked off on a
calm note last week with investors trading cautiously in anticipation of the
Primary Market Auction ("PMA") that held on Wednesday. However, towards
the end of the week, there was an uptick in activity levels as inflow (N209.0bn)
from matured Open Market Operations ("OMO") buoyed bullish sentiments
leaving system liquidity at N388.5bn long on Friday.
Consequently,
average yield across all NT-Bill tenors declined by 38bps W-o-W to close at
2.3% with most buying interest skewed towards the medium and long term
instruments, particularly the 10-Sep-20 (-80bps), 17-Sep-20 (-76bps) and
15-Oct-20 (-75bps) bills.
During
the week, the Apex bank offered N70.0bn worth of OMO bills to mop up
excess liquidity in the financial system. However, there was "no sale" on all
tenors despite the huge subscription (N344.2bn).
Conversely,
in the NT-Bills space, the CBN ,on behalf of the DMO, took advantage of the
impressive subscription levels given the plan to focus on domestic borrowings,
and absorbed N142.8bn as opposed to the N33.8bn initially
offered. As a result, stop rates on the 91- and 182-Day tenors closed higher at
2.5% (+65bps) and 2.85% (+36bps) respectively while the stop rate for the
364-Day tenor remained unchanged.
Please see detailed PMA results below:
Auction Date |
13-May-2020 |
13-May-2020 |
13-May-2020 |
|
|
|
|
Allotment / Issue Date |
14-May-2020 |
14-May-2020 |
14-May-2020 |
|
|
|
|
Tenor |
(91-Day) |
(182-Day) |
(364-Day) |
|
|
|
|
Offer Amount ( |
4,384,180,000 |
12,920,900,000 |
16,536,720,000 |
|
|
|
|
Total Subscription ( |
22,334,588,000 |
41,194,993,000 |
102,030,671,000 |
|
|
|
|
Allotment ( |
19,783,588,000 |
40,093,992,000 |
82,886,671,000 |
|
|
|
|
Range of Bid Rates (%): |
1.3900
- 6.6398 |
1.9400
- 7.4800 |
2.8000-
12.8000 |
|
|
|
|
Stop Rates (%): |
2.5000 |
2.8500 |
3.8400 |
|
|
|
|
Previous Stop Rates (%): |
1.8500
|
2.4900 |
3.8400 |
Bid-to-Cover Ratio: |
1.1x |
1.0x |
1.2x |
Allotment Ratio: |
0.9x |
1.0x |
0.8x |
This
week, there are no NT-Bills and OMO maturity, however, we expect sustained
buying interest in the secondary market due to the unfilled bids from last
week’s auction.
In
addition to cherry picking attractive instruments across the NT-Bills secondary
market, our recommendation is for investors to seek other attractive
opportunities such as available private money market offers like Commercial
Papers ("CP"). Qualified investors must conduct all necessary due
diligence on the Issuer of the private offerings.
Please see indicative secondary market
NT-Bills rates below:
Maturity |
Tenor (Days) |
Rate (%) p.a. |
Yield (%) p.a. |
2-Jul-20 |
45 |
2.55 |
2.56 |
27-Aug-20 |
101 |
3.65 |
3.69 |
24-Sep-20 |
129 |
3.90 |
3.95 |
26-Nov-20 |
192 |
4.35 |
4.45 |
28-Jan-21 |
255 |
4.55 |
4.70 |
Rates are valid till 01:45pm today (18-May-2020)
*Please note that the minimum subscription for T-Bills
is N100,
000.00
Dangote Cement Plc Series 15 & 16 Commercial Paper
The
Series 15 and 16 Commercial Paper issuance ("CP or the "Issuance"),
under the Dangote Cement PLC ("Dangote Cement") N150.0bn
CP Issuance Programme is now open and scheduled to close on Wednesday,
20-May-2020.
Dangote
Cement is the largest cement manufacturer in Sub-Saharan Africa with an
installed capacity of 45.6Mta across its operations in 10 African countries.
Dangote Cement is assigned AA+ long-term rating by GCR and Aa2.ng long-term
rating by Moody’s. It is one of the few corporates in Nigeria with a top-notch
rating of AA+.
Please see below, the indicative terms of the proposed offer:
Issuer |
Dangote
Cement PLC |
||||||
Description: |
Series
15 |
Series
16 |
|||||
Tenor: |
175-days |
266-days |
|||||
Target
Size: |
Up
to N50.0billion across both
tenors |
||||||
Discount
Rate (%): |
4.8833% |
5.7492% |
|||||
Implied
Yield (%): |
5.0000% |
6.0000% |
|||||
Offer
Open Date: |
Thursday,
14 May 2020 |
||||||
Offer
Close Date: |
Wednesday,
20 May 2020 |
||||||
Allotment
Date: |
Wednesday,
20 May 2020 |
||||||
Issuer
Rating: |
Aa2
(Moody); AA+ (GCR) |
||||||
Minimum
Subscription: |
N5.0million |
||||||
Tax
Consideration: |
Free
and clear of withholding taxes |
||||||
Offer valid till 9:00am on (20-May-20)
*Kindly note that the minimum subscription for commercial papers
is N5,000,000.00
FGN Bonds Update: Average Yield Inches 33bps W-o-W Amid Revised Q2:2020
FGN Bonds Issuance Calendar; N60.0bn Offering in PMA This Wednesday
Last
week, the FGN bonds secondary market started off on a slightly bullish note
with minimal activity observed at the short end of the curve. However,
activities turned bearish towards the end of the week as investors reacted to
the release of the Q2:2020 revised bonds issuance calendar by the Debt
Management Office ("DMO"). Subsequently, average yield across the curve
spiked by 33bps W-o-W to close at 10.6% on Friday.
According
to the DMO’s revised calendar, total borrowings in June is scheduled to
increase by N120.0bn. Going into this week, the DMO is scheduled
to offer N60.0bn across the 5-, 15- and 30-Year re-opening bonds
on Wednesday.
Please see details of the auction below:
Bond
Name |
12.75%
FGN APR 2023 (Re-opening) |
12.50% FGN MAR 2035 (Re-opening) |
12.98%
FGN MAR 2050 (Re-opening) |
Term-To-Maturity |
2
Years, 11 Months |
14 Years, 10 Months |
29
Years, 10 Months |
Range of Amount on Offer |
N10.0bn- N20.0bn |
N10.0bn- N20.0bn |
N10.0bn- N20.0bn |
We
anticipate a quiet trading session at the beginning of this week as investors
prepare to position for the PMA. Investors are also advised to seek instruments
with attractive yields that advanced last week.
Please
see indicative FGN bond rates below:
Bond |
Tenor (Years) |
Yield (%) |
Coupon (%) |
Implied Price |
Jul-21 |
2 |
4.40 |
14.50 |
111.29 |
Jan-22 |
3 |
4.75 |
16.39 |
118.70 |
Apr-23 |
4 |
8.30 |
12.75 |
111.40 |
Mar-24 |
5 |
7.75 |
14.20 |
120.96 |
Mar-25 |
6 |
7.80 |
13.53 |
122.73 |
Jan-26 |
7 |
9.50 |
12.50 |
112.90 |
Mar-27 |
8 |
10.00 |
16.29 |
130.55 |
Feb-28 |
9 |
10.20 |
13.98 |
119.90 |
Jul-34 |
15 |
10.65 |
12.15 |
110.81 |
Mar-36 |
17 |
10.75 |
12.40 |
112.39 |
Apr-37 |
18 |
10.75 |
16.25 |
142.43 |
Apr-49 |
30 |
11.75 |
14.80 |
124.98 |
Rates are valid till 01:45pm today (18-May-2020)
*Please note that the minimum subscription for FGN bonds is N20,000,000.00
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