NT-Bills Secondary Market Performance Turns Bullish as Average Yield Dips 9bps WoW to 4.1%

Proshare

Tuesday, April 06, 2021 / 01:33 PM / by Afrinvest Research / Header Image Credit: Forextime


Proshare Nigeria Pvt. Ltd.


In the past week, the Nigerian Treasury Bills ("NT-Bills") secondary market resumed on a quiet note, as market players focused on the Primary Market Auction ("PMA") slated to hold on Wednesday. However, the overall sentiment in the market turned slightly bullish as the week progressed and as investors adjusted their portfolios to take advantage of increasing yields.

Specifically, investors positioned at the middle of the curve as the 1-Jul-21, 15-Jul-21, and 29-Jul-21 bills contracted 36bps, 61bps and 47bps W-o-W respectively. Conversely, the short- and long-end of the curve closed mostly flat, losing 7bps and 1bps averagely respectively. As a result, the average yield across all tenors dipped 23bps W-o-W to 4.1%.

At the PMA on Wednesday, the Central Bank's total offer of
N89.7bn across the 91-, 182- and 364-Day tenors was met with weaker overall demand with a subscription ratio of 2.4x compared to 2.5x in the previous auction. Interestingly, investors demand shifted to the long-dated offer, which recorded a subscription ratio of 2.8x (from 1.9x at the previous auction) while the short- and mid-term offers witnessed weaker demand, with a subscription ratio of 0.9x and 1.1x (from 4.5x and 1.3x respectively).

In addition, the stop rate on the long-term offer improved 100bps to 7.0% while the short- and mid-term instruments remained at 2.0% and 3.5% respectively.

Please see below details of the PMA:

Auction Date

31-Mar-21

31-Mar-21

31-Mar-21

Allotment / Issue Date

1-Apr-21

1-Apr-21

1-Apr-21

Tenor

(91-Day)

(182-Day)

(364-Day)

Offer (₦)

10,000,000,000

11,600,581,000

68,080,464,000

Subscription (₦)

9,420,622,000

12,736,025,000

190,429,880,000

Allotment (₦)

2,878,850,000

3,240,389,000

138,711,877,000

Range of Bid Rates (%):

1.9800-7.0000

3.4899-8.5000

6.0000-11.2999

Stop Rates (%):

2.0

3.5

8.0

Previous Stop Rates (%):

2.0

3.5

7.0

Bid-to-Cover Ratio

3.3x

3.9x

1.4x

Allotment Ratio

3.5x

3.6x

0.5x

Subscription Ratio

0.9x

1.1x

2.8x


This week, we expect the activity level in the NT-Bills secondary market to improve due to buoyant financial system liquidity, which stood at
N513.0bn (long as at 01-Apr-21) and as a result of the sustained improvement in yields. Thus, we advise investors to take advantage of the relatively attractive opportunities in the market.


Please see indicative secondary market NT-Bills rates below:

Maturity

Tenor (Days)

Rate (%) p.a.

Yield (%) p.a.

29-Jul-21

114

2.05

2.06

9-Sep-21

156

3.23

3.28

14-Oct-21

191

4.20

4.29

25-Nov-21

233

4.75

4.90

10-Feb-22

310

5.16

5.40

Rates are valid till 01:45 pm today (06-Apr-21)


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

Proshare Nigeria Pvt. Ltd.


 
FGN Bonds Update: Bearish performance Persists as Average Yield Advances 7bps to Settle at 9.91%


In line with our expectations, demand in the FGN Bonds secondary market improved marginally last week, compared to the previous week, as investors adjusted their portfolios with attractive yields in the market.


In more detail, the average yield on short-tenured instruments dipped by 7bps to close at 6.89% W-o-W while the mid and long-term bonds expanded 19bps and 6bps respectively. Consequent to this, there was a bearish run for another week, as average yield improved slightly by 7bps W-o-W to 9.91% from 9.84% the previous week.


Particularly, the MAR-50, APR-29, and MAY-29 instruments rose the most by 30bps, 27bps, and 26bps in that order recording the most selloffs in the market while the JUL-2021, and JAN-2022, attracted investors the most by contracting 45bps and 20bps respectively as investors become warier of yields in the mid to long term, in the same light, there were massive sell-offs on longer-dated bonds particularly on the mid-end of the curve.


Going into the week, we envisage a rebound in the FGN Bond secondary market as investors continue to take advantage of the improved yields and therefore advise investors to position in maturities that have advanced along the curve.

 

Please see indicative secondary market bonds rates below:

Bond

Tenor (Years)

Yield (%)

Coupon (%)

Implied Price (N)

Apr-23

2

5.50

12.75

113.92

Mar-24

3

6.30

14.20

120.87

Mar-25

4

7.30

13.53

121.09

Jan-26

5

9.60

12.50

110.91

Mar-27

6

9.80

16.29

128.70

Feb-28

7

9.95

13.98

119.72

Jul-34

13

10.75

12.15

109.74

Mar-36

15

10.85

12.40

111.33

Apr-37

16

10.85

16.25

140.61

Apr-49

28

11.15

14.80

131.16

Rates are valid till 01:45 pm today (06-Apr-21) 

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


Proshare Nigeria Pvt. Ltd.


Related News

  1. April 2021 FGN Savings Bonds Offer for Subscription
  2. NSE Lists Additional FGN Bonds Issued in March 2021
  3. Treasury Bills Take Center Stage with Two Primary Auctions (NTB and OMO) Held Today
  4. Ahead of Next Treasury Bills Auction Scheduled for 31st of March 2021
  5. SEPLAT Issues $650m 5-Year Bond, Largest Nigerian Oil and Gas Offering in History
  6. Investors Benefit From Elevated Short-Term Interest Rates Continue, Stay Short on Duration
  7. Average NT-Bills Yield Inches 60bps Higher WoW to 4.2% Maintaining Bearish Run
  8. Kogi State Government Restructures Its Series 1 and 2 Bonds
  9. NSE Lists the Two FGN Savings Bonds Issued in March 2021
  10. SEPLAT Announces the Pricing of $650m 7.75% Senior Notes Due 2026

 

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

READ MORE:
Related News
SCROLL TO TOP