Next FG Bond Auction scheduled for Jan 22, 2014


Tuesday, January 21, 2014 3:27 PM / Meristem Wealth


Issue on Offer/Summary 

The Federal Government of Nigeria (FGN) Treasury Bills (TB) Primary Auction is scheduled to hold on the 22nd January, 2014. T-bills worth NGN162.889bn, and N147.820bn will mature on the 22nd & 23rd, 2014 respectively, while a total sum of NGN202.889bn will be issued in 91-day, 182-day and 364-day instruments. The CBN is expected to auction a total of NGN32.889bn in 91-day, NGN50.00bn in 182-day and NGN120.00bn in 364-day instruments. 


Outlook on Yields /Advised Stop Rates

We analyze the current yield environment in light of the outcome of the previous auctions on the respective instruments. In our view, the yields on short term instruments particularly on the 364-day has trended downward by 0.31% (current yield is 13.50%) since the last auction, while 91-day and 182-day instruments have been relatively stable at respective current yields of 11.65% and 12.49%.


We have also considered the current market mood regarding T-Bills instruments which is favourable. This year so far has seen the average yield on TB instruments across tenors decline by 0.41%, which is indicative of the current demand for the instrument. Also, in the auctions (PMA & OMO) held so far in 2014, there has been a 54.02% level of oversubscription. Furthermore, the long position in the capital and money markets is substantial enough for us to envisage that this auction will be as well patronized as the others so far in 2014.


Based on the level of liquidity in the system, investors' attraction for T-bills and macroeconomic data outlook particularly the likely retention of MPR at 12% post MPC meeting on the 21st of January, we advise the following stop rates for the respective instruments as listed below. We advise these rates with the dual purpose of achieving the best possible yield as well as ensuring the success of the bid.


91-Day NGN32.889bn 10.75%

182-Day NGN50.00bn 11.80%

364-Day NGN120.00bn 11.90% 


For further information from Meristem Wealth, Kindly click HERE to view the details of their report. 



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