NT-Bills Secondary Market Turns Bullish as Average Yield Declined 32bps to 6.6% WoW

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Monday, July 05, 2021 / 02:33 PM / By Afrinvest Research / Header Image Credit: AZ Big Media

 

Last week, the Nigerian Treasury Bills ("NT-Bills") secondary market took a bullish turn, supported by the liquidity boost on Wednesday (N201.3bn long) and as market players sought to fill lost Primary Market Auction ("PMA") bids. Consequently, average NT-Bills secondary market yields declined 32bps W-o-W to 6.6% (from 6.9% the previous week). In addition, strong demand was witnessed on mid- to long-tenor instruments, with yields contracting 35bps, 92bps and 107bps W-o-W on the 25-Nov-21, 31-Mar-22 and 28-Apr-22 bills respectively.

At the PMA that held on Wednesday 29-Jun-21, the Apex bank offered bills worth a total of N163.6bn (N81.8bn higher than its initial N81.7bn offer) across the 91- (N2.2bn), 182- (N3.3bn) and 364-Day (N158.0bn) tenors. Furthermore, stop rates on the 91- and 182-Day maturities remained unchanged while the 364-Day offers was cleared at 9.15%, slightly dipping 25bps from 9.40%.


Please see a detailed summary of the NT-Bills PMA below:

Auction Date

30-Jun-21

30-Jun-21

30-Jun-21

Allotment / Issue Date

01-Jul-21

01-Jul-21

01-Jul-21

Tenor

91-Day

182-Day

364-Day

Offer Amount (N)

2,878,850,000.00

20,000,000,000.00

58,857,012,000.00

Subscription (N)

5,025,396,000.00

5,125,956,000.00

435,847,335,000.00

Allotment N

2,263,036,000.00

3,314,956,000.00

158,040,241,000.00

Range of Bid Rates (%)

2.50 - 10.00

3.50 - 12.00

8.90 - 12.99

Previous Stop rates (%)

2.50

3.50

9.40

Stop Rates (%)

2.50

3.50

9.15

Subscription ratio

1.8x

0.3x

7.4x

Allotment ratio

0.5x

0.7x

0.4x



Please see the indicative secondary market NT-Bills rates below:

Maturity

Tenor (Days)

Rate (%) p.a.

Yield (%) p.a.

14-Oct-21

101

3.30

3.33

11-Nov-21

129

4.15

4.21

13-Jan-22

192

4.70

4.82

31-Mar-22

269

5.60

5.84

26-May-22

325

6.66

7.08

09-Jun-22

339

7.26

7.78

Rates are valid till 01:45 pm today (05-Jul-21)

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


Going into the week, we expect NT-Bills secondary market yields to move northwards given the overall dearth in system liquidity which resurfaced last week (closing the week at N36.1bn short on Friday). However, we anticipate improved system liquidity during the week due to maturing NT-Bills worth N58.01bn. Thus, we advise investors to take advantage of maturities that may improve along the curve.



FGN Bonds Update: Bullish Run Persists as Average Yield Dips 37bps W-o-W to 11.57%


Similarly, the FGN Bonds secondary market performance was bullish following the liquidity boost on Wednesday. As a result, average yield across the curve declined by 37bps W-o-W to settle at 11.6% from 11.9% the previous week.

Specifically, the average yields on short, medium and long-term bonds dipped 30bps, 40bps and 32bps W-o-W respectively. Particularly, the instruments that recorded the most buying interest were the 17-Mar-2714-Mar-24 and 23-Mar-25 maturities, with yields declining 55bps63bps, and 72bps W-o-W respectively.

Please see indicative secondary market bonds rates below:

Bond

Tenor (Years)

Yield (%)

Coupon (%)

Implied Price (N)

Apr-23

2

9.50

12.75

105.26

Mar-24

3

10.65

14.20

108.08

Mar-25

4

10.75

13.53

108.29

Jan-26

5

11.30

12.50

104.16

Mar-27

6

11.40

16.29

120.03

Feb-28

7

11.40

13.98

111.75

Jul-34

13

11.55

12.15

103.98

Mar-36

15

11.80

12.40

104.10

Apr-37

16

11.80

16.25

131.48

Apr-49

28

12.00

14.80

122.37

Rates are valid till 01:45 pm today (05-Jul-21) 
*Please note that the minimum subscription for FGN Bonds is N20,000,000.00


Proshare Nigeria Pvt. Ltd.


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