Bonds & Fixed Income | |
Bonds & Fixed Income | |
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PROSHARE | |
PROSHARE |
Monday, January 17, 2022 / 05:50 PM / by Afrinvest Research /
Header Image Credit: phive2015; iStock
Last week, the Nigerian Treasury Bills ("NT-Bills") secondary market maintained
its bullish run as investors anticipated the Primary Market Auction ("PMA")
that held last Wednesday (12-Jan-2022). As the week
progressed, tepid sentiments were maintained with minimal trading activities
despite buoyant system liquidity (N63.2bn long as of
Friday). Consequently, average yield contracted 4bps W-o-W to settle at 4.39%
from 4.43% the previous week.
In more detail, most demand was witnessed on medium and long-term instruments
as their average yields (3.73% and 5.13%) dipped 7bps and 4bps W-o-W
respectively. Specifically, the 31-Mar-2022(-39bps W-o-W) and 14-Jul-2022(-37bps
W-o-W) bills enjoyed the most buying interests.
At the PMA, the Apex bank offered a total of N77.6bn
across the 91-, 182- and 364-Day instruments. The offer maintained a
significant level of demand as it recorded a total bid-to-cover ratio of 1.46x
(N77.6bn offer vs. N113.1bn subscription). Furthermore, stop
rates on the 91- and 182-Day maturities were relatively stable while the
364-Day offer was cleared at 5.50%, advancing 60bps from 4.90%.
Please
see a detailed summary of the NT-Bills PMA below:
Auction Date |
12-Jan-22 |
12-Jan-22 |
12-Jan-22 |
Allotment / Issue Date |
13-Jan-22 |
13-Jan-22 |
13-Jan-22 |
Tenor |
91-Day |
182-Day |
364-Day |
Offer Amount ( |
4,220,558,000 |
7,459,979,000 |
65,931,722,000 |
Subscription ( |
2,493,776,000 |
2,263,973,000 |
108,306,605,000 |
Allotment |
2,187,776,000 |
1,457,973,000 |
53,899,205,000 |
Range of Bid Rates (%) |
2.45
– 5.25 |
3.20
– 6.75 |
4.59
– 7.69 |
Previous Stop rates (%) |
2.49 |
3.45 |
4.90 |
Stop Rates (%) |
2.50 |
3.44 |
5.50 |
Subscription ratio |
0.6x |
0.3x |
1.6x |
Allotment ratio |
0.9x |
0.6x |
0.5x |
Going into the week, we anticipate improved demand as investors channel their
unfilled PMA bids to the secondary market. In addition, system liquidity is
expected to be bolstered by Open Market Operations ("OMO")
maturities worth N88.4bn.
Thus, we advise investors to trade cautiously and take advantage of relatively
attractive yields along the curve.
Please see
indicative secondary market NT-Bills rates below:
Maturity |
Tenor (Days) |
Rate (%) p.a. |
Yield (%) p.a. |
31-Mar-22 |
73 |
3.75 |
3.78 |
26-May-22 |
129 |
4.85 |
4.93 |
9-Jun-22 |
143 |
5.15 |
5.26 |
14-Jul-22 |
178 |
5.83 |
6.00 |
25-Aug-22 |
220 |
6.75 |
7.04 |
9-Sep-22 |
235 |
7.05 |
7.39 |
FGN Bonds
Update: Average Yield Dips 7bps W-o-W to 11.51%
The domestic bonds secondary market
recorded a bullish run last week as FGN bonds market players reacted to the
release of the Q1:2022 FGN Bond issuance calendar by the Debt
Management Office ("DMO") where a new maturity
(2042s) will be offered in the market. Consequently, average yield shed 7bps
W-o-W to settle at 11.51% from 11.59% the previous week.
Specifically, average yields on the short and long tenors (8.45% and 12.78%)
witnessed the most buying interest (-14bps W-o-W) and (-8bps W-o-W) as yields
on JUL-2034,
APR-2023
and JAN-2026 contracted -41bps,
-29bps and -21bps W-o-W respectively.
This week, the DMO is scheduled to conduct a PMA on Wednesday (19-Jan-22).
Please see more details in the table below:
BONDS |
12.50% FGN JAN 2026 |
FGN JAN 2042 |
|
Re-opening |
New
Issue |
Term to Maturity |
4Years |
20Years |
Offer Amount (bn N) |
70
- 80 |
70
- 80 |
Going into the week, we expect quiet trading sessions at the beginning of the
week as investors anticipate the PMA scheduled to hold on Wednesday
(19-Jan-22). We therefore advise investors to take advantage of maturities with
relatively attractive yields across the curve, particularly at the shorter and
longer end of the curve.
Please see below FGN bonds secondary market rates:
Maturity |
Tenor (Years) |
Yield (%) |
Coupon (%) |
Implied Price (N) |
Apr-23 |
2 |
6.30 |
12.75 |
107.76 |
Mar-24 |
3 |
8.30 |
14.20 |
111.41 |
Mar-25 |
4 |
9.65 |
13.53 |
110.38 |
Jan-26 |
5 |
10.55 |
12.50 |
106.24 |
Mar-27 |
6 |
11.35 |
16.29 |
118.86 |
Feb-28 |
7 |
11.55 |
13.98 |
110.40 |
Jul-34 |
13 |
11.75 |
12.15 |
102.58 |
Mar-36 |
15 |
12.10 |
12.40 |
101.97 |
Apr-37 |
16 |
12.10 |
16.25 |
128.52 |
Apr-49 |
28 |
12.40 |
14.80 |
118.57 |
Rates are
valid till 01:45 pm today [17-Jan-22]
*Please note that the minimum
subscription for FGN Bonds is ₦20,000,000.00
Related News
1. Invest in FGN
Monthly Bond Auction - January 2022
2. January 2022 FGN
Savings Bonds Offer for Subscription
3. The Bulls Opened
the Year's Performance as Average Yield Declines 1bp WoW to 4.39%
4. NGX Lists Two
FGN Savings Bonds Issued in December 2021
5. NGX Lists
Supplementary FGN Bonds Issued in December 2021
6. Quiet Activities
as Secondary Market Shed 1bp WoW to Close at 4.48%
7. Target
Comfortably Met by the DMO in the December 2021 Bond Auction
8. Summary of FGN
Bond Auction Results for December 2021
9. Nigeria's Green
Bond Market Exceeds N55bn Mark as NGX Targets More Issuances
10.
Performance
Turned Bullish Amidst PMA Results; Average Yield Dipped 2bps WoW to 4.49%