Bullish Run Sustained as Average Yield in the NT-Bills Market fell 18bps WoW to close at 4.05%

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Monday, April 12, 2021 / 03:02 PM / By Afrinvest Research / Header Image Credit: Value Research 


Proshare Nigeria Pvt. Ltd.


The bullish trend was sustained on Nigerian Treasury Bills ("NT-Bills") at the secondary market last week, as rising yields in the market price instruments cheaper across most maturities. Consequently, the average yield across all NT-Bills maturities fell 18bps to close at 4.05% from 4.22% the week before.


Interestingly, all instruments at the short-end of the market closed flat as market participants shifted their attention to the mid and long tenured-end of the curve, with the average yield in those segments falling 74bps and 23bps to close at 3.35% (from 4.09%) and 5.40% (from 5.63%) W-o-W respectively.

In more detail, mid-tenor bills such as the 16-Sep-21, 9-Sep-21, and 30-Sep-21 attracted investors the most as they dipped 132bps, 95bps, and 77bps in that matter although there was uncertainty for the shorter-dated instruments, which were grossly untouched in the week under review. In the same light, longer-dated bills like 28-Oct-21, 11-Nov-21, and 25-Nov-21 fell 44bps, 39bps, and 35bps W-o-W respectively.

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, 15-Apr-21.


Please see details of our PMA expectation below: 

TENOR

91-DAY

182-DAY

364-DAY

Offer Amount

15,915,252

4,502,889

49,141,302

Last Stop Rate (31-Mar-21)

2.00%

3.50%

8.00%

Expected Stop Rate Range (%)

2.00% - 3.00%

3.00% -4.00%

8.00% - 10.00%


N50.4bn worth of OMO and N56.65bn of T-Bills are set to hit the market as they mature this week to boost the financial liquidity level (-N67.9bn as of Friday 9-Apr-21). We advise investors to position in instruments with improved yields over the past weeks as the bullish run persists in the NT-Bills secondary market.

Please see the indicative secondary market NT-Bills rates below:

Maturity

Tenor (Days)

Rate (%) p.a.

Yield (%) p.a.

01-Jul-21

80

1.2

1.20

26-Aug-21

136

2.50

2.52

16-Sep-21

157

3.23

3.28

11-Nov-21

213

4.65

4.78

13-Jan-22

276

4.94

5.13

Rates are valid till 01:45 pm today (12-Apr-21)
*Please note that the minimum subscription for T-Bills is N100,000.00

Proshare Nigeria Pvt. Ltd. 


Commercial Papers

We are pleased to inform you that the Series 15 and 16 Commercial Paper issuance ("CP or the "Issuance"), under the Coronation Merchant Bank Limited ("Coronation MB") N100.0bn CP Issuance Programme is now open and scheduled to close on Tuesday, 13 April 2021.

Coronation MB is a Private Limited Liability Company duly licensed by the Central Bank of Nigeria as a Merchant Bank in Nigeria, providing services in treasury services, investment banking, and corporate banking to corporate, institutional investors, and high-net-worth individuals. The Bank, a well-recognized brand and "A" rated entity has consistently delivered strong financial performance, with its asset base and shareholders' funds at
N412.36 billion and N40.11 billion respectively, as of 31st December 2020.

Kindly find below a summary of the Commercial Paper Issuance:

NAME

MINIMUM SUBSCRIPTION

TENOR

DISCOUNT RATE

YIELD

OFFER CLOSING DATE

Coronation Merchant Bank Limited
(Series XV & XVI)

N5.0 million

180-Day

 7.0000%

7.2503%

13-Apr-21

268-Day

9.0000%

9.6368%

 

The offers close 09:00 am on 12-Apr-21
*Please note that the minimum subscription for Commercial Papers is N5,000,000.00
 


FGB Bonds Update: Bearish performance Persists as Average Yield Advances 46bps W-o-W to Rest at 10.37%


Last week, the FGB Bonds secondary market improved as sell-offs continue to push yields higher. Investors generally reacted to the release of the bond issuance calendar for the second quarter which showed an increase in the range of amounts on offer. Consequently, the average yield in the market inched higher by 46bps from 9.19% in the previous week to close at 10.37%.

Specifically, the medium and long tenor instruments increased averagely by 63bps and 72bps to close at 11.36% and 12.39% W-o-W respectively while the short end of the curve tanked marginally by 2bps to 6.86% as market participants positioned in anticipation of future rate hikes.

Thus, the most sold instruments were at the long-end of the curve like the JUL-2045 and APR-2049 maturities that advanced 116bps and 127bps W-o-W respectively. On the flip side, the shorter tenured instruments like JUL-2021, APR-2023, and MAR-2024 maturities attracted investors the most as their yields fell 14bps, 66bps, and 31bps W-o-W respectively.


Going into the week, we expect calm albeit bearish trading sessions as investors generally position their portfolios ahead of the upcoming FGN Bond auction at the primary market. We therefore advise investors to take advantage of relatively attractive offers in the secondary market particularly at the short and medium end of the curve.

Please see indicative secondary market bonds rates below:

Bond

Tenor (Years)

Yield (%)

Coupon (%)

Implied Price (N)

23-Apr

2

             5.70

             12.75

                   113.41

24-Mar

3

             6.20

             14.20

                   121.06

25-Mar

4

             8.10

             13.53

                   118.02

26-Jan

5

             9.70

             12.50

                   110.48

27-Mar

6

           10.20

             16.29

                   126.57

28-Feb

7

           10.25

             13.98

                   118.04

29-Apr

8

           10.30

             14.55

                   122.85

Jul-34

9

           11.25

             12.15

                   104.67

Mar-36

14

           11.40

             12.40

                   106.71

Apr-37

16

           11.45

             16.25

                   133.94

Apr-49

17

           12.10

             14.80

                   118.91

Mar-50

29

           11.90

             12.98

                   108.71

Rates are valid till 01:45 pm today (12-April-21) 
*Please note that the minimum subscription for FGN Bonds is N20,000,000.00 



Proshare Nigeria Pvt. Ltd. 

MTN Nigeria Bond Offer

MTN Nigeria is one of the highest-rated firms in Nigeria with a corporate rating of 'Aa' and 'AA' by Agusto & Co and GCR respectively. The rating is a reflection of the Company’s history of strong financial performance - record revenue in excess of N1 trillion (largest revenue by a listed corporate), stable and healthy profit margins (c. +50% EBITDA margin), comfortably low leverage (0.4x Net Debt/EBITDA) predominantly in local currency, and strong free cash flow. The ratings further reflect MTNN's experienced and dedicated management team, and the beneficial relationship with MTN Group - Africa's leading cellular telecommunications company servicing over 251 million subscribers, with a strong presence in 21 countries (including the Middle East).

Please see details of the MTN Bond offer

Issuer:

MTN Nigeria Communications Plc

Ratings (Issuer):

AA (GCR)

Aa (Agusto & Co)

Ratings (Issue):

AA (GCR)

Aa (Agusto & Co)

Lead Issuing House:

Chapel Hill Denham Advisory Limited

Programme Size:

N200 billion

Issue Size:

Up to N100 Billion

Interest Basis:

Fixed Rate

Ranking of Bonds:

Senior Unsecured obligation of the Issuer

Series:

1

Tenor:

7 Years

Principal Redemption:

5 Year Moratorium, Amortizing thereafter until redemptions

Price Guidance

11.50%  - 12.00%

Offer Open:

Friday, April 9, 2021

Offer Close:

Friday, April 16, 2021

Use of Proceeds:

Optimization of Finance and Network Expansion

Minimum Subscription:

N10 million and in multiples of N1,000,000.00 thereafter

Listing:

FMDQ Securities Exchange Limited

 

The offers close 09:00am on 16-Apr-21                             
*Please note that the minimum subscription for this Bond is N10,000,000.00


Proshare Nigeria Pvt. Ltd.


Related News

  1. Coronation Merchant Bank Commercial Paper Issuance Series XV and XVI Now Open
  2. MTN Nigeria Series 1 Bond Issuance of Up to N100 Billion Now Open
  3. FMDQ takes a Major Step in Commencing its Derivatives Market
  4. Yields Climb as DMO Released Q2 2021 Issuance Calendar, Looks to Raise 10% More
  5. NT-Bills Secondary Market Performance Turns Bullish as Average Yield Dips 9bps WoW to 4.1%
  6. April 2021 FGN Savings Bonds Offer for Subscription
  7. NSE Lists Additional FGN Bonds Issued in March 2021
  8. Treasury Bills Take Center Stage with Two Primary Auctions (NTB and OMO) Held Today
  9. Ahead of Next Treasury Bills Auction Scheduled for 31st of March 2021
  10. SEPLAT Issues $650m 5-Year Bond, Largest Nigerian Oil and Gas Offering in History

 

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