Bearish Performance as Average Yield Advance 32bps WoW to 4.51%

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Monday, December 06, 2021 / 03:24 PM / by Afrinvest Research / Header Image Credit: iStock

 

Last week, the Nigerian Treasury Bills ("NT-Bills") secondary market reversed its bullish trend due to persistent supply on the long-dated maturities (as average yields gained 86bps W-o-W). Subsequently, the average yield advanced by 32bps W-o-W to close at 4.51%.


The short-dated bills however closed flat at 3.52%, while the average yield at the mid-end of the curve dipped 55bps W-o-W to close at 5.22%. In more detail, the most buying interest was recorded on the 9-JUN-22 (-172bps), 30-JUN-22 (-138bps), and 10-Mar-22 (-136bps) instruments in that order.


This week, a total of 
₦15.0bn worth of maturing NT-Bills will be offered over by the Apex Bank in a Primary Market Auction ("PMA") on Wednesday, 8-Dec-21.


Proshare Nigeria Pvt. Ltd. 

 

Please see our PMA expectations below:

Auction Date

8-Dec-21

8-Dec-21

Allotment Date

9-Dec-21

9-Dec-21

Tenor

(91-Day)

(182-Day)

Value on Offer (₦)

4,938,371.00

10,094,148.00

Previous Stop Rates (%)

2.50

3.50

Expected Stop Rate Range (%)

2.45 - 2.55

3.45 - 3.55


We anticipate improved activity levels in the NT-Bills secondary market this week, given the expected buoyant liquidity levels from maturing instruments (NT-Bills:
N15.0bn, OMO bills: N4.3bn) to further boost system liquidity levels (which stood at N15.4bn as of Friday, 03-DEC-21). Thus, we advise investors to continue to position in relatively attractive bills across the curve.
 

Please see indicative secondary market NT-Bills rates below:

Maturity

Tenor (Days)

Rate (%) p.a.

Yield (%) p.a.

10-Feb-22

66

2.65

2.66

31-Mar-22

115

4.00

4.05

26-May-22

171

4.93

5.05

14-Jul-22

220

5.95

6.17

25-Aug-22

262

6.70

7.04

9-Sep-22

277

7.04

7.44

Rates are valid till 01:45 pm today [06-Dec-21]
*Please note that the minimum subscription for NT-Bills is N100,000.00

 

FGN Bonds Update: Bearish Performance Marginally Sustained as Average Yield inched 1bp W-o-W to 11.42%


The FGN Bonds secondary market slightly sustained its bearish sentiment as market activities were mixed along the curve. Consequently, the average yield in the market gained 1bp W-o-W to close at 11.42% (from 11.41% the previous week).


Specifically, the average yield in the short-end gained 23bps W-o-W to close at 8.68% (from 8.45% the week before) while the yield on the mid-and long-tenured maturities lost 15bps and 1bp to close at 11.95% and 12.84% respectively for the same period. 

               
Going into the week, we expect that activity levels will remain stable in the secondary market as investors position in improving yields along the curve. Thus, we maintain our advice that investors take advantage of relatively attractive yields across all tenors in the market.


Please see below FGN bonds secondary market rates:

Bond

Tenor (Years)

Yield (%)

Coupon (%)

Implied Price (N)

Apr-23

2

6.80

12.75

107.75

Mar-24

3

8.10

14.20

112.40

Mar-25

4

9.50

13.53

111.15

Jan-26

5

10.85

12.50

105.34

Mar-27

6

11.30

16.29

119.39

Feb-28

7

11.55

13.98

110.52

Jul-34

13

11.70

12.15

102.89

Mar-36

15

12.25

12.40

100.96

Apr-37

16

12.30

16.25

126.94

Apr-49

28

12.15

14.80

120.91

Rates are valid till 01:45 pm today [06-Dec-21]

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


Proshare Nigeria Pvt. Ltd.


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 Proshare Nigeria Pvt. Ltd.

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