Bonds & Fixed Income | |
Bonds & Fixed Income | |
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Monday, January 25, 2021 / 3:41 PM / By Afrinvest
Research / Header Image Credit: TVN24
Last
week, the Nigerian Treasury Bills ("NT-Bills")
market sustained its slightly bullish run as yields marginally contracted by
-3bp W-o-W to 0.5% as a result of system liquidity which was N586.2bn
(positive) on Wednesday.
In
more details, average yields on the short, medium and long term declined all with
of 2bps, 3bps and 12bps W-o-W respectively. Particularly the longer-end of the
curve experienced the most contractions in yields especially the 26-Aug-21
(-18bps), 29-Jul-21 (-17bps) and 16-Sep-21(-15bps) bills.
The
Apex bank is scheduled to rollover maturing bills worth N187.2bn at the
Primary Market Auction ("PMA") to hold on Thursday 28-Jan-21
across the 91-Day (N7.5bn), 182-Day (N54.5bn) and 364-Day (N125.2bn)
tenors.
Please
see below details of the upcoming PMA:
TENOR |
91-
DAY |
182
- DAY |
364
- DAY |
Offer
Amount |
7,500,000,000 |
54,592,585,000 |
125,203,918,000 |
Last
Stop Rate |
0.5000 |
1.0000 |
1.5000 |
Expected
Stop Rate Range (%) |
0.400 - 1.9900 |
0.3800 - 2.7550 |
0.8000 - 7.0000 |
This
week, we expect OMO and NT-Bills maturities worth N190.2bn and N187.2bn respectively to bolster system liquidity which stood at N575.9bn
(positive) on Friday. Thus,
We
anticipate a sustenance of the bullish sentiments in the secondary market as investors
Unmet bids may filter from the PMA. Thus, our advice to investors remains that
they seek alternative investments such as bonds and Commercial papers given the
low yield environment.
Please
see indicative secondary market NT-Bills rates below:
Tenor
(Days) |
Rate
(%) p.a. |
Yield
(%) p.a. |
|
13-May-21 |
108 |
1.20 |
1.20 |
10-Jun-21 |
136 |
1.45 |
1.46 |
26-Aug-21 |
213 |
2.05 |
2.07 |
28-Oct-21 |
276 |
2.44 |
2.49 |
25-Nov-21 |
304 |
2.66 |
2.72 |
Rates are valid till 01:45pm today (25-Jan-2021)
*Please note that the minimum subscription for T-Bills
is N100,
000.00
FGN Bonds Update: Bearish sentiments as Average Yield Expands by 36bps
W-o-W to 7.09%; FGN Bond PMA Held on Wednesday
The
FGN Bond secondary market had a bearish run last week as market players took
advantage of the first monthly auction for the year that held on Wednesday.
Consequently, average yield across the curve expanded by 36bps W-o-W to settle
at 7.09% from 6.73% the previous week.
Across
tenors, yields on the medium and long term instruments advanced by 42bps and
62bps W-o-W respectively while the short tenor declined by 5bps. The medium and
long tenors had the most buying interests with 18-Jul-34 (80bps) and 26-Apr-29
(74bps)
At
the first FGN Bond PMA issuance for the year, the 10-year and 15-year reopened
instruments were oversubscribed by 83.68% (N50.0bn offered vs. N91.8bn
subscribed) and 112.74% (N50.0bn subscribed vs. N106.4bn
subscribed) respectively while the 25-year re-opened instrument was under
subscribed by 19.86%. In addition, Debt management Office ("DMO") raised
N122.36bn which is 81.57% of the amount offered.
Auction
Date |
20-Jan-20 |
20-Jan-20 |
20-Jan-20 |
Allotment
/ Issue Date |
22-Jan-20 |
22-Jan-20 |
22-Jan-20 |
Term
to maturity |
6
Years, 2 Months |
14
Years, 2 Months |
24
Years, 6 Months |
Offer
Amount (N) |
50,000,000,000.00 |
50,000,000,000.00 |
50,000,000,000.00 |
Total
Subscription (N) |
91,835,303,000.00 |
106,372,276,000.00 |
40,066,243,000.00 |
Allotment
(N) |
49,401,500,000.00 |
57,927,850,000.00 |
15,028,000,000.00 |
Range
of Bid Rates (%) |
5.7000%
- 16.0000% |
7.5000%
- 15.0000% |
4.4000%
- 12.5000% |
Stop
rates (%) |
7.9800 |
8.7400 |
8.9500 |
Previous
stop rates (%) |
- |
6.9500 |
7.0000 |
Bid-to-Cover
Ratio |
1.8x |
2.1x |
0.8x |
Allotment
Ratio |
0.5x |
0.5x |
0.4x |
Going
into the week, we expect that the FGN bonds secondary market may continue to
trade in its current bearish posture as investors focus on the improved yields
in the primary market. However, we do not rule out the possibility of an
increased buying appetite from investors due to the buoyant system liquidity.
Thus, we advise investors to take advantage of the relatively improved yields
along the curve.
Please see indicative secondary market bond rates
below:
Bond |
Tenor (Years) |
Yield (%) |
Coupon (%) |
Implied Price (N) |
Jan-22 |
1 |
1.10 |
16.39 |
115.19 |
Apr-23 |
2 |
3.80 |
12.75 |
119.14 |
Mar-24 |
3 |
4.35 |
14.20 |
128.57 |
Mar-25 |
4 |
4.50 |
13.53 |
133.90 |
Jan-26 |
5 |
5.90 |
12.50 |
128.18 |
Mar-27 |
6 |
7.15 |
16.29 |
144.77 |
Feb-28 |
7 |
7.25 |
13.98 |
136.73 |
Jul-34 |
13 |
8.20 |
12.15 |
131.86 |
Mar-36 |
15 |
8.25 |
12.40 |
135.49 |
Apr-37 |
16 |
8.30 |
16.25 |
170.15 |
Apr-49 |
28 |
8.25 |
14.80 |
171.27 |
Rates are valid till 01:45pm today (25-Jan-2020)
*Please note that the minimum subscription for Bonds is N20,
000,000.00
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