Average Yield Dipped 7bps WoW to 5.20% Following PMA

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Monday, October 18, 2021 / 12:58 PM / by Afrinvest Research / Header Image Credit: iStock


Last week, the Nigerian Treasury Bills ("NT-Bills") secondary market furthered its bullish performance for a third consecutive week. This was on the back of sustained demand which was triggered by unmet Primary Market Auction ("PMA") bids.

 

Consequent on this, average secondary NT-Bills market yields contracted 7bps W-o-W to settle at 5.20% (from 5.27% the previous week). Particularly, long-dated NT-Bills recorded the most demand, with the 30-Jun-22, 28-Apr-22 and 14-Jul-22 bills declining the most by 65bps, 52bps and 46bps W-o-W respectively.


On Wednesday, the Apex Bank conducted a PMA where a total of N121.7bn worth of NT-Bills was offered across the 91- (N5.2bn), 182- (N8.8bn), and 364-Day (N107.6bn) tenors. The offer maintained a strong level of demand as its total subscription ratio stood at 4.1x (N493.0bn total subscribed).  In addition, stop rates on all offers were maintained, save for the long-term instrument which moderated 25bps to 7.25% (from 7.50% at the last auction). The long-term offer recorded significant demand from investors with a subscription ratio of 4.5x (N480.1bn subscribed).


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Please see a detailed summary in the table below:

Auction Date

13-Oct-21

13-Oct-21

13-Oct-21

Allotment / Issue Date

14-Oct-21

14-Oct-21

14-Oct-21

Tenor

(91-Day)

(182-Day)

(364-Day)

Maturity Date

13-Jan-22

14-Apr-22

13-Oct-22

Offer (N)

5,239,058,000.00

8,799,752,000

107,620,657,000

Subscription (N)

5,077,558,000.00

7,804,787,000

480,148,556,000

Allotment (N)

4,220,558,000.00

6,947,787,000

176,064,955,000

Range of Bid Rates (%)

2.4800-5.2500

3.4999-6.7500

6.8000-9.1000

Stop Rates (%)

2.50

3.50

7.25

Previous Stop Rates (%)

2.50

3.50

7.50

Subscription Ratio

1.0x

0.9x

4.5x

Allotment Ratio

0.8x

0.9x

0.4x

 
Going into the week, we anticipate sustained demand levels in the secondary market, as investors continue seeking to match unfilled bids supported by stable liquidity levels (which stood at N118.9bn long as at Friday). Thus, we advise investors to position in relatively attractive maturities along the curve.
 

Please see NT-Bills indicative rates below:

Maturity

Tenor (Days)

Rate (%) p.a.

Yield (%) p.a.

10-Feb-22

115

                  2.90

             2.93

31-Mar-22

164

                  4.23

             4.31

26-May-22

220

                  5.05

             5.21

14-Jul-22

269

                  5.90

             6.17

25-Aug-22

311

                  6.76

             7.17

9-Sep-22

326

                  7.06

             7.54

Rates are valid till 01:45 pm today [18-Oct-21]

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


Proshare Nigeria Pvt. Ltd. 


FGN Bond Update: Headline Inflation Moderated 38bps Y-o-Y; Average Yield Tightened Marginally by 1bp WoW to 11.33%

The FGN Bonds secondary market performance was mixed last week, as average yield on secondary market bonds fell marginally by 1bp W-o-W to settle at 11.33% (from 11.34% the previous week). In more detail, the 17-Mar-27 maturity witnessed the most demand, contracting 31bps W-o-W but was offset by sell-offs on the 22-Jan-26 and 23-Mar-25 maturities which expanded 20bps and 10bps W-o-W respectively.

This week, the Debt Management Office ("DMO") is slated to conduct a FGN Bond PMA on Wednesday, 20-Sep-21, where a total of N150.0bn will be offered for subscription across the JAN 2026, APR 2037 and MAR 2050 bonds.

 

BOND

12.50% FGN JAN 2026

16.2499% FGN APR 2037

12.98% FGN MAR 2050

(Re-opening)

(Re-opening)

(Re-opening)

Term-To-Maturity

4 Years, 3 Months

15 Years, 6 Months

28 Years, 5 Months

Amount on Offer (N)

            50,000,000,000.00

                                  50,000,000,000.00

                    50,000,000,000.00

 
Furthermore, we expect secondary market performance to be determined by stop rates from the bond auction and as investors react to the CPI and inflation report for September released last Friday by the National Bureau of Statistics ("NBS") which reported contraction of 38bps  (printed at 16.63%). Therefore, investors are advised to trade cautiously and take advantage of instruments which advanced on the week.

Please see below FGN Bonds secondary market indicative rates:

Bond

Tenor (Years)

Yield (%)

Coupon (%)

Implied Price (N)

Apr-23

2

             7.80

             12.75

                   106.98

Mar-24

3

             8.60

             14.20

                   111.92

Mar-25

4

             9.55

             13.53

                   111.40

Jan-26

5

             9.90

             12.50

                   108.82

Mar-27

6

           10.95

             16.29

                   121.35

Feb-28

7

           11.05

             13.98

                   113.08

Jul-34

13

           11.50

             12.15

                   104.25

Mar-36

15

           12.05

             12.40

                   102.34

Apr-37

16

           12.05

             16.25

                   129.17

Apr-49

28

           12.05

             14.80

                   121.90

Rates are valid till 01:45 pm today [18-Oct-21]
*Please note that the minimum subscription for FGN Bonds is N20,000,000.00


Proshare Nigeria Pvt. Ltd.


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