NT-Bills Update: Average Yield Contracts 30bps WoW to 5.29% Following Improved Demand

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Monday, October 04, 2021 / 03:24 PM / by Afrinvest Research / Header Image Credit: iStock

 

Last week, performance in the Nigerian Treasury Bills ("NT-Bills") secondary market turned bullish post-auction, as investors' unmet bids filtered in from the primary market. Consequently, average yields during the four-day week dipped 30bps W-o-W to settle at 5.29% from 5.61% the previous week.

 

Specifically, most demand was recorded on the mid-tenored instruments that declined 85bps W-o-W as the 31-Mar-22 (-126bps W-o-W), 17-Mar-22 (-109bps W-o-W) and 10-Mar-22 (-100bps W-o-W) bills enjoyed the most buying interest.

 

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At last Wednesday's Primary Market Auction ("PMA"), the central bank's total offer of N111.9bn was met with strong demand, recording a subscription ratio of 1.6x (total subscription: N174.7bn). The longer offer maintained its strong demand levels with a subscription ratio of 1.6x (subscription: N166.3bn). Furthermore, stop rates on the long-term offer advanced 30bps to settle at 7.50% (from 7.20% at the previous auction) while the short- and mid-term offers remained at 2.50% and 3.50% respectively.

 

Please see details of PMA results below:

Auction Date

29-Sep-21

29-Sep-21

29-Sep-21

Allotment / Issue Date

30-Sep-21

30-Sep-21

30-Sep-21

Tenor

(91-Day)

(182-Day)

(364-Day)

Maturity Date

30-Dec-21

31-Mar-22

29-Sep-22

Offer (N)

2,263,036,000.00

3,240,389,000.00

106,370,499,000.00

Subscription (N)

5,469,616,000.00

2,947,675,000.00

166,323,727,000.00

Allotment (N)

4,612,616,000.00

2,090,675,000.00

108,712,225,000.00

Range of Bid Rates (%)

2.4800-5.2500

3.4999-6.7500

6.8000-9.1000

Stop Rates (%)

2.50

3.50

7.50

Previous Stop Rates (%)

2.50

3.50

7.20

Subscription Ratio

2.4x

0.9x

1.6x

Allotment Ratio

0.8x

0.7x

0.7x

 

Going into the week, we expect moderate demand levels in the secondary market as investors channel their unfilled PMA bids into the secondary market along with buoyant liquidity levels (which stood at N213.9bn long as at Thursday). We therefore advise investors to trade cautiously and position in relatively attractive offers along the curve. 

 

Please see NT-Bills indicative rates below:

Maturity

Tenor (Days)

Rate (%) p.a.

Yield (%) p.a.

13-Jan-22

101

                  2.70

             2.72

31-Mar-22

178

                  4.23

             4.32

26-May-22

234

                  5.05

             5.22

14-Jun-22

253

                  5.90

             6.15

25-Aug-22

325

                  6.76

             7.19

9-Sep-22

340

                  7.06

             7.56

 

Rates are valid till 01:45 pm today [04-Oct-21]

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

 

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FGN Update: Market Sustains Bullish Run as Average Yield Moderates 3bps W-o-W to 11.20%

The FGN bonds secondary market was mildly bullish last week, as pockets of demand were recorded across short-dated maturities. As a result, average yields across the curve dipped marginally by 3bps W-o-W to close at 11.20% from 11.23% the previous week.

 

Particularly, the APR-23, JAN-22 and MAR-24 maturities enjoyed the most buying interest, moderating 45bps, 39bps and 32bps W-o-W respectively.

 

Please see below FGN Bonds secondary market rates

Bond

Tenor (Years)

Yield (%)

Coupon (%)

Implied Price (N)

Apr-23

2

7.80

12.75

107.13

Mar-24

3

8.60

14.20

112.10

Mar-25

4

9.55

13.53

111.52

Jan-26

5

9.75

12.50

109.43

Mar-27

6

10.85

16.29

121.93

Feb-28

7

10.95

13.98

113.63

Jul-34

13

11.50

12.15

104.25

Mar-36

15

12.30

12.40

100.65

Apr-37

16

11.60

16.25

133.12

Apr-49

28

11.85

14.80

123.83

Rates are valid till 01:45 pm today [04-Oct-21]
*Please note that the minimum subscription for FGN Bonds is N20,000,000.00

 

This week, the Debt Management Office ("DMO") is scheduled to auction the 2- and 3-Year tenor FGN savings bond for the month of October 2021. Furthermore, we expect yields in the secondary market to remain slightly subdued as investors position in relatively attractive maturities and therefore, advise investors to position in maturities that have advanced and also stay alert for possible corporate offerings.

 

Proshare Nigeria Pvt. Ltd.


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