The Bears Take Centre-Stage as Average Yield Expands 27bps WoW to 4.95%

Proshare

Monday, August 30, 2021 / 05:53 PM / by Afrinvest Research / Header Image Credit: iStock

 

The Nigerian Treasury Bills ("NT-Bills") secondary market traded on a bearish note throughout last week, as market participants exited positions across the curve given the subdued liquidity levels (sinking to N201.1bn negative on Tuesday) and ahead of Wednesday's Primary Market Auction ("PMA").

 

Consequent on this, average yields on secondary market NT-Bills expanded 27bps W-o-W to 4.95% - with the 28-Apr-22 (+83bps W-o-W) and 12-May-22 (+89bps W-o-W) bills advancing the most - and closed the week on a quiet note with minimal trading activities post-PMA. 

 

At the PMA, the Apex Bank's total offer of N157.2bn across the 91-, 182- and 364-Day tenors was met with strong demand, recording an overall subscription of N394.1bn (subscription ratio: 2.5x) and with the most demand centred on the 1-Year offer (subscription ratio: 3.3x). In addition, stop rates for the long offer recorded a further contraction of 55bps from the last auction to settle at 6.80%.


Proshare Nigeria Pvt. Ltd.


Please see below details of the PMA:

Auction Date

25-Aug-21

25-Aug-21

25-Aug-21

Allotment / Issue Date

26-Aug-21

26-Aug-21

26-Aug-21

Tenor

(91-Day)

(182-Day)

(364-Day)

Offer (N)

3,123,978,000.00

32,705,313,000.00

121,376,867,000.00

Subscription (N)

4,843,952,000.00

24,170,251,000.00

365,106,158,000.00

Allotment (N)

3,537,952,000.00

22,864,251,000.00

280,934,106,000.00

Range of Bid Rates (%)

1.7500-8.0000

3.0000-9.5000.00

4.5000-10.5000.00

Stop Rates (%)

2.50

3.50

6.80

Previous Stop Rates (%)

2.50

3.50

7.35

Subscription Ratio

1.6x

0.7x

3.0x

Allotment Ratio

0.7x

1.0

0.8x

 

This week, we expect that the NT-Bills secondary market will sustain its bearish posture with no significant inflows expected during the week to offset pressured liquidity levels (despite the improvement to N137.3bn long as at Friday). Thus, we advise investors to position in relatively attractive maturities that advanced W-o-W across the curve and stay alert for prime corporate offerings - such as commercial papers.   

 

Please see NT-Bills indicative rates below:

Maturity

Tenor (Days)

Rate (%) p.a.

Yield (%) p.a.

25-Nov-21

87

                  3.25

             3.28

13-Jan-22

136

                  3.95

             4.01

31-Mar-22

213

                  4.85

             4.99

26-May-22

269

                  6.40

             6.72

30-Jun-22

304

                  6.96

             7.39

14-Jul-22

318

                  7.26

             7.75

 Rates are valid till 01:45 pm today [30-Aug-21]

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


Proshare Nigeria Pvt. Ltd.


FGN Bonds Update: Sustained Bullish Performance as Average Yields Dip 23bps to 11.15%

Last week, the FGN Bond secondary market maintained its bullish run, fuelled by a sustained flow of lost primary market bids. As a result, average yields across all maturities dipped 23bps W-o-W to 11.15% (from 11.38% the previous week).

 

While demand was recorded across the curve, short-term FGN Bonds enjoyed the most demand, inching 32bps southwards W-o-W, particularly on the MAR- 25 and JAN-26 maturities that dipped the most by 47bps and 48bps W-o-W respectively.

 

Going into the week, we expect a sustained pressure on average FGN Bond secondary market yields as investors continue to position in relatively attractive maturities given the perceived impending lower yield environment. Thus, we advise investors to trade cautiously in the secondary market while also looking out for attractive offers from corporates.

 

Please see below FGN Bonds secondary market indicative rates:

Bond

Tenor (Years)

Yield (%)

Coupon (%)

Implied Price (N)

Apr-23

2

8.30

12.75

106.73

Mar-24

3

8.30

14.20

113.24

Mar-25

4

9.60

13.53

111.61

Jan-26

5

9.70

12.50

109.80

Mar-27

6

10.35

16.29

124.57

Feb-28

7

10.55

13.98

115.81

Jul-34

13

11.30

12.15

105.66

Mar-36

15

11.70

12.40

104.82

Apr-37

16

11.55

16.25

133.61

Apr-49

28

11.65

14.80

125.81

Rates are valid till 01:45 pm today [30-Aug-21]
*Please note that the minimum subscription for FGN Bonds is N20,000,000.00


Proshare Nigeria Pvt. Ltd.


Related News

  1. NGX Lists Additional Units of FGN Bond Issued in August 2021
  2. FMDQ Admits FSDH Merchant Bank's New Commercial Paper Series
  3. Bullish Trend Persists as Average Yield Dipped 8bps WoW to 4.69%
  4. More Work for the DMO to Meet Funding Target
  5. Summary of FGN Bond Auction Results for August 2021
  6. DMO Oversells N260bn While Cutting Rates Off the Back of Strong Demand at the FGN Bond Auction
  7. NGX Lists Two Additional FGN Savings Bonds Issued in August 2021
  8. Bond Yields Crash Following Continued Slow Down In Inflation Rates
  9. Ahead of Next FGN Bond Auction Scheduled for August 18th, 2021
  10. Silent Open To The Week As The Monthly Bond Auction Draws Near

 

Proshare Nigeria Pvt. Ltd.

READ MORE:
Related News
SCROLL TO TOP