NT-Bills Secondary Market Remained Relatively Flat as Average Yield Inched 1bp WoW to 4.86%

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Monday, May 10, 2021 / 05:49  PM / by Afrinvest Research / Header Image Credit: DTS Voice


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The Nigerian Treasury Bills ("NT-Bills") secondary market resumed last week on a quiet note as activities remained minimal for most trading sessions of the week. However, by Wednesday the overall sentiment in the market turned slightly bearish due to tightened liquidity which furthered deepened to N167.9bn (negative as at Thursday, 6th May, 2021). Consequently, average yield across all maturities inched 1bp higher W-o-W to settle at 4.86% from 4.85% the previous week.

 

Particularly, all instruments at the short and mid-end of the curve closed fairly flat as market participants shifted their attention to the long-end of the curve, expanding 3bps W-o-W, especially on the 28-Oct-21 instrument advanced 76bps and 11-Nov-21 dipped by 44bps W-o-W respectively.


At the Open Market Operations ("OMO") auction during the week, there were no changes in the Stop rates of 7.00%, 8.50% and 10.10% for 89-Day, 180-Day and 348-Day OMO bills respectively as pressured liquidity levels continued to impact the subscription levels (total of N22.4bn). The Central Bank of Nigeria ("CBN") sold a low volume of N17.0bn across the tenors on total offer of N20.0bn, recording a total bid-to-cover ratio of 1.31x (N22.4bn subscribed).


Going into the week, a total of N117.6bn worth of NT-Bills investment is expected to mature and be rolled over by the Apex Bank in the Primary Market Auction ("PMA") on Wednesday, 5th May, 2021, across the 91-, 182- and 364-Day tenors.


Please see details of the auction in the table below:

Auction Date

13-May-21

13-May-21

13-May-21

Allotment Date

14-May-21

14-May-21

14-May-21

Tenor

(91-Days)

(182-Days)

(364-Days)

Value on Offer (N)

24,670,420

10,000,000

82,886,671

Previous Stop Rates (%):

2.00

3.50

9.75

Expected Stop Rate Range (%):

1.80 - 2.20

2.90 - 3.50

8.50 - 10.00


Furthermore, we expect to see improved activities in the NT-Bills secondary market, given elevated liquidity levels from N117.6bn worth of maturing NT-Bills scheduled to hit the system on Thursday. Thus, we advise investors to look out for possibly more attractive offers in the bond space while qualified investors partake in the NT-Bills PMA.


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

Maturity

Tenor (Days)

Rate (%) p.a.

Yield (%) p.a.

26-Aug-21

108

2.35

2.37

16-Sep-21

129

3.20

3.24

28-Oct-21

171

4.33

4.42

10-Feb-22

276

5.14

5.35

31-Mar-22

325

6.46

6.85

Rates are valid till 01:45 pm today (10-May-21)

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



FGB Bonds Update: Bearish performance Persists as Average Yield Advances 44bps W-o-W to Settle at 12.37%.


The FGN bond secondary market sustained its bearish momentum last week, as expected optic in inflation and liquidity levels which was N407.5bn (negative as at Wednesday) continued to affect activities in this space. Consequently, average yield across all maturities advanced 44bps W-o-W to settle at 12.37% from 11.93% the previous week.

Particularly, average yields on the short-, medium-, and long-term instruments expanded by 38bps, 62bps and 10bps respectively. The most sold instruments were 14-Mar-24, 23-Mar-25 and 22-May-29 with 1.10%, 0.75% and 0.71% respectively.

Going into the week, we expect the calm bearish trading sessions in the bonds secondary market to remain due to tightened liquidity levels which was at N22.5bn (negative as at Friday, 7th May, 2021). 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)

Apr-23

2

9.55

12.75

105.60

Mar-24

3

10.80

14.20

108.10

Mar-25

4

10.80

13.53

108.42

Jan-26

5

12.00

12.50

101.71

Mar-27

6

12.20

16.29

116.70

Feb-28

7

12.20

13.98

108.01

Jul-34

13

13.10

12.15

94.06

Mar-36

15

13.15

12.40

95.12

Apr-37

16

13.20

16.25

120.07

Apr-49

28

13.35

14.80

110.55


Rates are valid till 01:45 pm today (10-May-21) 


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



Coronation Merchant Bank Limited's N30 Billion Commercial Paper Issuance:

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 corporates, 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 N412.36bn and N40.11bn respectively, as at 31st December 2020. The opening of this Series XVII and XVIII Commercial Paper Issuances by Coronation Merchant Bank Limited ("Coronation MB" or the "Bank") under its N100 billion Commercial Paper Programme, will be across 180 and 268-day tenors for a target amount of up to N30 billion.

Kindly find below a summary of the Commercial Paper Issuance:

Issuer

Coronation Merchant Bank Limited

Size

Up to â‚¦30 billion

Tenor

180 and 268 days

Yield

Series XVII:    180 days -   7.2503%
Series XVIII:    268 days -  11.9665%

Discount Rate

Series XVII:    180 days -   7.0000%
Series XVIII:    268 days -  11.0000%

Issuer Rating

B- (Fitch); A+ (Agusto); A- (GCR)

Subscription

Minimum of N5 million and multiples of N1,000 thereafter

Tax Considerations

Free and clear of withholding taxes

Offer Open

Monday, 10 May 2021

Offer Close Date

Tuesday, 18 May 2021

Circulate the Allocation Notice to investors

Tuesday, 18 May 2021

Investors fund their commitments

Wednesday,19 May 2021

Use of proceeds

Short-term working capital requirements

 


 
















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