Demand Sparks Bullish Outing as Average Yield Contracts 46bps WoW to 4.61% Last Friday

Proshare

Monday, September 06, 2021 / 12:45 PM / by Afrinvest Research / Header Image Credit: iStock

 

The bearish performance was reversed last week, on the back of improved demand buoyed by decent financial system liquidity throughout last week (N393.1bn long as at 03-Sep-21). Accordingly, average yield in the Nigerian Treasury Bills ("NT-Bills") secondary market contracted 46bps W-o-W to close at 4.61% last Friday from 5.07% the previous week.


Precisely, most demand was on 11-Nov-21 (-114bps W-o-W), 27-Jan-22 (-103bps W-o-W) and 10-Feb-22 (-103bps W-o-W), as market participants seized bargain opportunities on short and medium-term bills.

 

This week, the Apex bank is slated to rollover N138.2bn worth of maturing NT-Bills in its bi-weekly Primary Market Auction ("PMA") on Wednesday, 08-Sep-21. We anticipate sustained high bid-to-cover ratios in line with the trend at previous auctions, as well as a sustained moderation of stop rate on the 364-Day offer.

 

Please see NT-Bills indicative rates below:

Maturity

Tenor (Days)

Rate (%) p.a.

Yield (%) p.a.

25-Nov-21

80

                  3.25

             3.27

10-Feb-22

157

                  4.43

             4.52

31-Mar-22

206

                  4.80

             4.93

26-May-22

262

                  6.40

             6.71

30-Jun-22

297

                  6.94

             7.36

14-Jul-22

311

                  7.26

             7.74

Rates are valid till 01:45 pm today [06-Sep-21]

*Please note that the minimum subscription for NT-Bills is ₦100,000.00

 

Going into the week, we expect sustained demand on secondary market bills as investors anticipate further moderation in rates at the PMA. Consequently, we advise investors to position in relatively attractive NT-Bills in the earlier trading sessions of this week. Also, qualified investors may look out for possible Commercial Paper offerings.

 

FGN Bonds Update: Bullish Run Persists, as Average Yield Declines 11bps W-o-W to 11.04%

The domestic sovereign bonds space recorded another bullish performance, despite recording quiet trading sessions at the start of week. The performance was sustained mainly by domestic investors' buying interest on mid-dated bonds (which declined 16bps W-o-W). Thus, average yield across all maturities shed 11bps W-o-W to 11.04% (from 11.15% the previous week)

 

JAN-22 and MAR- 35 maturities both declined the most 52bps and 35bps W-o-W respectively. On the flip side, sell offs on JUL-45 and APR-23 pushed the instruments 30bps and 24bps higher W-o-W

 

Going into the week, we envisage a continued bullish outing. Therefore, we advise investors to cherry-pick relatively attractive instruments, especially short-term bonds that advanced last week.

 

Please see below FGN Bonds secondary market indicative rates:

Bond

Tenor (Years)

Yield (%)

Coupon (%)

Implied Price (N)

Apr-23

2

8.30

12.75

106.66

Mar-24

3

8.30

14.20

113.16

Mar-25

4

9.40

13.53

112.19

Jan-26

5

9.70

12.50

109.76

Mar-27

6

10.25

16.29

124.99

Feb-28

7

10.40

13.98

116.53

Jul-34

13

11.30

12.15

105.66

Mar-36

15

11.40

12.40

107.01

Apr-37

16

11.45

16.25

134.51

Apr-49

28

11.50

14.80

127.35

Rates are valid till 01:45 pm today [06-Sep-21]
*Please note that the minimum subscription for FGN Bonds is ₦20,000,000.00


Proshare Nigeria Pvt. Ltd.


Related News

  1. September 2021 FGN Savings Bonds Offer for Subscription
  2. The Bears Take Centre-Stage as Average Yield Expands 27bps WoW to 4.95%
  3. NGX Lists Additional Units of FGN Bond Issued in August 2021
  4. FMDQ Admits FSDH Merchant Bank's New Commercial Paper Series
  5. Bullish Trend Persists as Average Yield Dipped 8bps WoW to 4.69%
  6. More Work for the DMO to Meet Funding Target
  7. Summary of FGN Bond Auction Results for August 2021
  8. DMO Oversells N260bn While Cutting Rates Off the Back of Strong Demand at the FGN Bond Auction
  9. NGX Lists Two Additional FGN Savings Bonds Issued in August 2021
  10. Bond Yields Crash Following Continued Slow Down In Inflation Rates

 

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

READ MORE:
Related News
SCROLL TO TOP