NT-Bills PMA Holds This Wednesday; Average Yield in NT-Bills Secondary Market Dips 4bps WoW

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Monday, November 09, 2020 / 01:58 PM / by Afrinvest Research / Header Image Credit: Key Differences

 

There was a slightly bullish outing in the Nigerian Treasury Bills ("NT-Bills") secondary market last week, despite quiet trading sessions as financial system liquidity levels (N920.0bn positive as at Friday) supported demand in the space. Thus, average yield across all tenors marginally declined marginally by 4bps W-o-W to close at 0.5%.


In more detail, demand was observed largely on long-term NT-Bills, with 16-Sep-21 (-32 bps) recording the most buying interests. While the short and medium term maturities experienced flat performances with no change from the previous week.


This week, the Central Bank of Nigeria ("CBN") is slated to conduct a Primary Market Auction ("PMA") on Wednesday, where a total of N167.8bn worth of NT-Bills will be rolled over across the 91-, 182- and 364- Day tenors.


Please see below our PMA expectations:

Tenor

91- Day

182 - Day

364 - Day 

Offer Amount (N)

19,783,588.00

40,093,992.00

107,938,478.00

Previous Stop Rate

0.3400%

0.5000%

0.9800%

Expected Stop Rate Range

0.1500% - 0.3000%

0.2000% - 0.4500%

0.5000% - 0.9000%

 

Furthermore, yields in the secondary market are expected to remain pressured due to high liquidity levels. Nevertheless, calm trading sessions are anticipated this week as investors interest filter to alternative investments with higher expected returns. We therefore maintain our recommendation that investors with higher risk appetites and longer time horizon take advantage of opportunities in available commercial papers or more attractive bonds.

 

Please see indicative secondary market T-Bills rates below:

Maturity

Tenor (Days)

Rate (%) p.a.

Yield (%) p.a.

14-Jan-21

66

2.45

2.46

25-Feb-21

108

3.00

3.03

10-Jun-21

213

3.75

3.83

15-Jul-21

248

3.90

4.01

16-Sep-21

311

4.26

4.42

 

Rates are valid till 01:45pm today (09-Nov-20)

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


FGN Bond Update: Bond Market Recorded Bullish Performance as Average Yield Contracts 15bps WoW to 3.9%

Last week, bullish performance in the domestic bond secondary market persisted for the third week in a row, on the back of investor demand braced by high liquidity levels. Consequently, average yield across all instruments dipped 15bps W-o-W to 3.9% from 4.1% the previous week as the Mar-24 and Jan-22 maturities witnessed the most buying interests contracting 173bps and 139bps W-o-W respectively.


Going into the week, we expect sustained bullish performance in the bonds secondary market due to demand pressures from local investors on short-term bonds. Therefore, we advise investors to take position on more attractive maturities along the curve while seeking available corporate offerings.


Please see indicative secondary market bond rates below:

Bond

Tenor (Years)

Yield (%)

Coupon (%)

Implied Price (N)

Mar-25

5

1.30

13.53

151.80

Jan-26

6

2.40

12.50

149.08

Mar-27

7

2.80

16.29

178.01

Feb-28

8

2.95

13.98

171.83

Jul-34

14

4.15

12.15

182.88

Mar-36

16

4.20

12.40

192.11

Apr-37

17

4.20

16.25

242.03

Apr-49

29

6.30

14.80

211.83

 

Rates are valid till 01:45pm today (09-Nov-2020)

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


Proshare Nigeria Pvt. Ltd.


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