NT-Bills Secondary Market Sustains Bearish Run as Average Yield Remains Unchanged at 0.1% WoW

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Monday, December 07, 2020  / 12:22 PM / by Afrinvest / Header Image Credit: Crypto-News


Proshare Nigeria Pvt. Ltd.


Last week, the Nigerian Treasury Bills ("NT-Bills") market sustained its bearish run with yields marginally expanding by 3bps W-o-W to 0.1%as investors continue to grow weary of the low-yield environment despite improved system liquidity of N638.2bn as at Friday. Average yields on the short and medium dated maturities remained unchanged while sell offs on the 14-Oct-2020 led to a 44bps increase W-o-W.


This week, the Apex bank is scheduled to roll over maturing bills worth N50.9bn at the Primary Market Auction ("PMA") across the 91 (N4.4bn), 182 (N7.8bn) and 364-Day (N38.7bn) tenors.


Please see below our PMA expectations

TENOR

91- DAY

182 - DAY

364 - DAY 

Offer Amount

4,405,140,000

7,820,805,000

38,700,000,000

Last Stop Rate

0.02%

0.09%

0.15%

Expected Stop Rate Range (%)

0.01% - 0.02%

0.04% - 0.07%

0.09% - 0.1%


This week, we expect OMO and NT-Bills maturities worth N50.9bn and N294.1bn respectively to bolster system liquidity. Hence, we expect the CBN to intervene by mopping up excess liquidity via the PMA auction. We also anticipate a sustenance of the bearish sentiments in the secondary market as investors wait on the side-lines ahead of the PMA while also seeking alternative investments given the low yield environment.


Please see indicative secondary market NT-Bills rates below:

Maturity

Tenor (Days)

Rate (%) p.a.

Yield (%) p.a.

25-Feb-21

80

1.00

1.00

29-Apr-21

143

1.60

1.61

1-Jul-21

206

2.05

2.07

26-Aug-21

262

2.25

2.29

14-Oct-21

311

2.66

2.72

Rates are valid till 01:45pm today (07-Dec-2020)

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


FGN Bonds Update: Bearish sentiments as Average Yield increases by 20bps W-o-W to 4.1%; FGN Bond PMA Holds this Wednesday

The FGN Bond secondary market reversed its bullish run last week following sell-offs as investors reacted to the news of the issuance of CBN Special Bills. Consequently, average yield across the curve expanded by 19bps W-o-W to settle at 4.1% from 3.9% the previous week.


Across tenors, yields on the medium and long term instruments advanced by 43bps and 23bps w-o-w respectively while short-term bonds particularly the 23-Mar-25 (-44bps), 27-Jan-22 (-23bps) and 14-Mar-24 (-17bps) instruments recorded buying interests.


We expect investors to continue to wait on the side-lines ahead of the CBN Special Bill issuance. However, we do not rule out the possibility of bargain hunting on instruments that advanced in yields last week. Thus, active investors are advised to trade along short-term bonds that had more sell offs last week while looking out for investment-grade corporate bonds with relatively more attractive return.


Please see indicative secondary market bond rates below:

Bond

Tenor (Years)

Yield (%)

Coupon (%)

Implied Price (N)

Mar-24

4

1.30

14.20

141.16

Jan-26

6

3.20

12.50

143.61

Mar-27

7

3.15

16.29

174.30

Feb-28

8

3.40

13.98

167.13

Jul-34

14

4.45

12.15

177.96

Mar-36

16

4.50

12.40

186.60

Apr-37

17

4.80

16.25

228.75

Apr-49

29

6.30

14.80

211.71

Rates are valid till 01:45pm today (07-Dec-2020)

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


Proshare Nigeria Pvt. Ltd.


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  3. Yields Retreated As Fixed Income Markets Reacts To CBN's Special Bills
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  5. CBN Looks to Improve Retail FX Liquidity in The Parallel Market Through a Series of Directives
  6. Anchoria Fixed Income Monitor: Interbank System Awash With Liquidity
  7. Investors' Sentiment Remain Weak in the NT-Bills Secondary Market as Average Yield Closes Flat
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  9. 364-Day T-bill at 0.15% Yield: How Low Can It Get?
  10. Treasury Bill Auction Holds Wednesday November 25th, 2020


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