Mild Demand from Investors Drives Average Yield Lower By 4bps to 1.5%; Commercial Papers Available

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Monday, February 22, 2021 / 02:08 PM / by Afrinvest Research / Header Image Credit: Getty Images 


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The bearish streak in Nigerian Treasury Bills ("NT-Bills") secondary market furthered into the start of last week, as average yield inched 2bps higher on Monday to 1.5% following continued selloffs on mid-dated maturities. By Tuesday, performance improved as pockets of demand for medium-term instruments trickled into the secondary market.

Consequent on this, the average yield across all tenors contracted 4bps W-o-W to close at 1.51% from 1.55% the previous week as supply was outweighed by the demand from local investors especially on the 15-JUL-21 bill which dipped 75bps.

On Thursday, the Central Bank of Nigerian ("CBN") conducted its customary Open Market Operation ("OMO") auction where it allotted a total of N180.0bn across the 89-, 180- and 362-Day tenors. Also, the stop rates improved to 7.0%, 8.5% and 10.1% on short-, medium- and long-term offers respectively.

This week, the Apex bank is expected to rollover a total of N128.2bn across the 91-, 182- and 364-Day tenors at the Primary Market Auction ("PMA") on Wednesday.



Please see below more details and our expectations on the upcoming PMA:

Tenor

91- Day

182 - Day

364 - Day

Offer Amount

20,370,000,000

55,850,000,000

52,000,000,000

Last Stop Rate (%)

1.0000

2.0000

4.0000

Expected Stop Rate Range (%)

1.0000 - 2.0000

2.0000 - 3.0000

4.0000 - 5.0000



Please see T-Bills rates below:

Maturity

Tenor (Days)

Rate (%) p.a.

Yield (%) p.a.

1-Jul-21

129

1.45

1.46

26-Aug-21

185

1.90

1.92

28-Oct-21

248

2.30

2.34

25-Nov-21

276

2.54

2.59

13-Jan-22

325

2.66

2.72

Rates are valid till 01:45pm today (22-Feb-21)
*Please note that the minimum subscription for T-Bills is N100,000.00

Furthermore, we anticipate that the N472.2bn worth of maturing OMO bills scheduled to hit the system on Thursday will further boost liquidity levels (N207.6bn positive on Friday). Also, we expect quiet trading at the secondary market  as investors demand will shift to the PMA. Therefore, we advise investors to remain on the lookout for possibly more attractive commercial papers and short-term bond offers.


Commercial Papers


Dufil Prima Foods PLC

We are pleased to inform you of the Series 3 and 4 Commercial Paper issuance ("CP or the "Issuance"), under Dufil Prima Foods PLC's ("Dufil" or the "Issuer") N30.bn programme is now open and scheduled to close on 26 February 2021.Dufil, the makers of the world's popular brand of Instant Noodle - "Indomie", is Nigeria's pioneer, foremost and largest producer within the noodles segment of the consumer goods industry.

Today, the Issuer continues to dominate the noodle segment by further entrenching its growth strategies centred around a backward integration model and strong distribution network, while also engaging in the production of other complimentary products such as snacks, flour, pasta, seasoning, oil and flexible packaging from strategically located factories across Nigeria and Ghana.


Please find below a summary of the Offer;

Issuer:

Dufil Prima Foods PLC

Series:

3

4

Tenor:

182-days

268-days

Target Size:

Up to N30.0bn across all tenors

Discount Rate:

3.9218%

4.8229%

Implied Yield:

4.0000%

5.0000%

Offer Opens:

Friday, 19 February 2021

Offer Closes:

Friday, 26 February 2021

Allotment Date:

Friday, 26 February 2021

Settlement Date:

Tuesday, 02 March 2021

Issuer Rating:

A- (GCR.); A- (DataPro);

Minimum Subscription:

N5 million

Tax Consideration:

Free and clear of withholding taxes



Proshare Nigeria Pvt. Ltd.


Nigerian Breweries PLC

We also wish to inform you that the Nigerian Breweries PLC Issue of up to N8.0bn Series 12, 13 and 14 Commercial Papers ("Nigerian Breweries") from the company's N100bn commercial paper programme is now open and scheduled to close on Thursday, 25 February 2021.


Please see below the terms of the offer. 

Issuer:

Nigerian Breweries PLC

Series:

Series 12

Series 13

Series 14

Tenor:

120 days

183 days

267 days

Target Size:

Up to N8.0bn

Discount Rate:

2.4796%

2.9555%

3.8863%

Implied Yield:

2.5000%

3.0000%

4.0000%

Offer Open Date:

Friday, 19 February 2021

Offer Close Date:

Thursday, 25 February 2021

Settlement Date:

Monday, 1 March 2021

Issue Date

Monday, 1 March 2021

Maturity Date:

29-Jun-21

31-Aug-21

23-Nov-21

Issuer Rating:

Aa- (Agusto); A1+ (GCR)



 

 

 

 

 

 

 

 









FGN Bonds Update:  Bearish Performance as Average Yield Contracts 76bps W-o-W to 9.4%


Last week, the FGN Bonds secondary market performance was bearish, as investors continued to price higher while on the lookout for improved yields at the primary market. As a result, the average yield across the curve closed 37bps higher W-o-W to settle at 9.4% from 9.0% the previous week.

Particularly, the 22-JAN-26, 18-JUL-34 and 24-JUL-45 maturities recorded the most sell-offs expanding 121bps, 83bps and 130bps W-o-W respectively.

On Wednesday, the Debt Management Office ("DMO") offered a total of N150.0bn across the 10-, 15- and 25-Year reopening instruments. The offer was met with significant demand with a total bid-to-cover ratio of 1.3x (N189.5bn total subscription).


Please see below a detailed summary of the auction:

 

16.2889% MAR 2027

12.50% MAR 2035

9.80% JUL 2045

Auction Date:

17-Feb-21

17-Feb-21

17-Feb-21

Tenors:

10-Yr Re-opening

15-Yr Re-opening

25-Yr Re-opening

Term-To-Maturity:

6 Years, 1 months

14 Years, 1 months

24 Years, 5 months

Amount Offered:

50,000,000,000.00

50,000,000,000.00

50,000,000,000.00

Subscription:

77,050,000,000.00

72,330,000,000.00

40,130,000,000

Amount Allotted:

33,620,000,000.00

28,900,000,000.00

18,030,000,000.00

Range of Bids:

8.1441% - 13.0000%

10.0000% - 13.5000%

10.0000% - 15.000000%

Stop Rates:

10.2500%

11.2500%

11.8000%

Previous Stop Rates:

7.9800%

8.7400%

8.9500%

Bid to Cover Ratio:

1.5x

1.4x

0.8x

Allotment Ratio:

0.4x

0.4x

0.4x


This week, we expect that investors continue to price domestic bonds higher amidst the improved yields and anticipate improved demand in the secondary market, as investors may seek to fill unmet bids from the primary market. Thus, we advise investors to position in relatively attractive maturities that advanced last week.


Please see indicative secondary market bond rates below:

Bond

Tenor (Years)

Yield (%)

Coupon (%)

Implied Price (N)

Apr-23

2

5.80

12.75

114.00

Mar-24

3

6.30

14.20

121.66

Mar-25

4

6.60

13.53

124.44

Jan-26

5

9.00

12.50

113.64

Mar-27

6

9.50

16.29

130.74

Feb-28

7

9.65

13.98

121.67

Jul-34

13

10.40

12.15

112.48

Mar-36

15

10.65

12.40

112.97

Apr-37

16

10.65

16.25

142.70

Apr-49

28

10.80

14.80

135.08

Rates are valid till 01:45pm today (22-Feb-21)
*Please note that the minimum subscription for FGN Bonds is N20,000,000.00

Proshare Nigeria Pvt. Ltd.


Related News

1.       February 2021 FGN Bond Auction: An Auction to Reassure the DMO

2.      Dufil Prima Foods Plc Series 3 and 4 Commercial Paper Now Open

3.      FMDQ Exchange Admits Coronation Merchant Bank's New Commercial Paper Series on its Platform

4.      Local Demand at The OMO Auction Improves Amidst Buoyant Liquidity, CBN Maintains Rates

5.      FGN Bond Auction: Weak Demand Forces The DMO to Raise Stop Rates by c.254bps

6.      Summary of FGN Bond Auction Results for February 2021

7.      FIDELITYBK Announces Result of Offer for Subscription of its N41bn Bonds Due 2031

8.     Inflation Comes Out Higher Than Expected at 16.47%, Bond Yields React Negatively

9.      Ahead of Next FGN Bond Auction Scheduled for 17th February 2021

10.  Bond Yields Cross Above 11.00% As Market Remains Weak Ahead of Monthly Auction

11.   NT-Bills Secondary Market Sustains Bearish Run as Average Yield Expands 45bps to 1.5% WoW

 

 Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

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