Average NT-Bills Yield Inches 60bps Higher WoW to 4.2% Maintaining Bearish Run

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Monday, March 29, 2021 / 02:42 PM / by Afrinvest Research / Header Image Credit: Getty Images


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The bearish trend was sustained on Nigerian Treasury Bills ("NT-Bills") at the secondary market last week as key market participants continue to anticipate a rise in yields. Therefore, the average yield across all NT-Bills maturities gained 60bps to close at 4.2% from 3.6% the previous week.

 
Consequently, average yields on short- and long-term bills advanced 0.6% and 1.0% W-o-W respectively while medium-term NT-Bills closed flat albeit with a slightly bearish bias, up 3bps W-o-W.

 
In more detail, sharp sell-offs were witnessed at the long end of the curve with 10-Feb-22 and 24-Feb-22 advancing the most, up 2.2% and 2.5% W-o-W respectively, triggered by the FGN bond auction results. On the flip side, there were buying interests on 30-Sep-21 and 14-Oct-21 bills, down 0.5% W-o-W apiece. 


This week, we expect mild trading sessions in the secondary market as investors stay on the sidelines ahead of the NT-Bills Primary Market Auction ("PMA") slated for Wednesday, 31-Mar-21.


Please see details of our PMA expectation below: 

TENOR

91-DAY

182-DAY

364-DAY

Offer Amount

10,000,000,000

17,600,000,000

68,080,000,000

Last Stop Rate (18-Mar-21)

2.00%

3.50%

7.00%

Expected Stop Rate Range (%)

2.00% - 4.00%

3.00% -5.00%

6.00% - 10.00%


N95.7bn worth of NT-Bills and N180.8bn worth of OMO maturities is also expected to further bolster financial system liquidity (N41.7bn as of Friday 26-Mar-21). We advise investors to seize bargains on secondary market instruments that advanced last week as well as a position at the NT-Bills PMA.


Please see indicative secondary market NT-Bills rates below:

Maturity

Tenor (Days)

Rate (%) p.a.

Yield (%) p.a.

29-Jul-21

122

2.05

2.06

26-Aug-21

150

2.50

2.53

28-Oct-21

213

4.45

4.57

13-Jan-22

290

4.94

5.14

10-Feb-22

318

5.16

5.40

Rates are valid till 01:45 pm today (29-Mar-21)
*Please note that the minimum subscription for T-Bills is N100,000.00
  

FGN Bonds Update: Bearish Performance as Average Yields Improve 31bps W-o-W to settle at 9.8%

 
As predicted, the FGN bonds secondary market was calm last week, on the back of the reopening of the 2027, 2035, and 2045 bonds by the Debt Management Office ("DMO") in the primary market which was grossly oversubscribed.


Please see details of the Bonds auction below:

16.2884% FGN MAR 2027

12.50% FGN MAR 2035

9.80% FGN JUL 2045

Auction Date:

24-Mar-21

24-Mar-21

24-Mar-21

Settlement Date:

26-Mar-21

26-Mar-21

26-Mar-21

Maturity Date:

17-Mar-27

27-Mar-35

24-Jul-45

Tenors:

10-Year

15-Year

25-Year

Term-To-Maturity:

6 Years

14 Years

24 Years, 4 Months

Amount Offered (N' bn):

50.0

50.0

50.0

Total Bids (N' bn):

82.0

125.0

215.0

Successful Bids (N' bn):

48.0

88.0

176.0

Subscription (N' bn):

65.3

110.2

158.0

Amount Allotted (N' bn):

44.0

86.3

131.8

Range of Bids:

9.9500% - 13.0000%

10.9500% - 13.5000%

9.0000% - 14.5000%

Marginal Rates:

10.50%

11.50%

12.00%


Thus, the average yield across all instruments adjusted 31bps northward to 9.8% W-o-W sustaining its bearish run from the previous week. Sell-offs were recorded across all instruments improving average yields by 36bps, 24bps, and 34bps at the short, medium, and long end of the curve respectively.


However, the APR-23, MAR-24, and JAN-26 instruments picked investors' buying interest contracting 44bps, 49bps, and 2bps W-o-W respectively.


This week we expect more traction in the secondary market as investors adjust their portfolios with increasing yields in the market. In that light, we advise investors to position in attractive yields across all tenors in the market.

 

Please see indicative secondary market bonds rates below:

Bond

Tenor (Years)

Yield (%)

Coupon (%)

Implied Price (N)

23-Apr

2

4.95

12.75

115.23

24-Mar

3

5.90

14.20

122.23

25-Mar

4

6.40

13.53

124.72

26-Jan

5

9.20

12.50

112.58

27-Mar

6

9.20

16.29

131.99

28-Feb

7

9.40

13.98

122.86

29-Apr

8

9.50

14.55

128.02

Jul-34

9

10.20

12.15

110.53

Mar-36

14

10.20

12.40

115.79

Apr-37

16

10.50

16.25

142.91

Apr-49

17

10.90

14.80

129.25

Mar-50

29

10.90

12.98

118.09

Rates are valid till 01:45 pm today (29-Mar-21) 

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


Proshare Nigeria Pvt. Ltd.


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