Secondary Market Maintains Bullish Run as Average Yield Declines 9bps WoW to 5.27%

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Monday, October 11, 2021 / 03:07 PM / by Afrinvest Research / Header Image Credit: iStock


The Nigerian Treasury Bills ("NT-Bills") secondary market maintained a bullish run last week as liquidity levels were elevated at
N124.3bn at the beginning of the week. Investors cherry-picked instruments with relatively attractive yields in the market.


Consequently, the average yield contracted by 9bps W-o-W to close at 5.27 %( from 5.36% the preceding week). Specifically, most declines were recorded on the 28-Oct-21 (-85bps), 11-Nov-21 (-81bps), and 25-Nov-21 (-77bps) bills respectively.


This week, the CBN is scheduled to conduct a Primary Market Auction ("PMA") rolling over NT-Bills worth
N121.66bn across the 91-(N5.3bn), 182-(N8.8bn), and 364-Day (N107.6bn) tenors. Thus, we expect quiet trading sessions at the start of the week as investors prepare to position at the PMA.


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Please see our expectations below:

Tenor

91-Day

182-Day

364-Day

Offer Amount (N)

5,239,058,000.00

8,799,752,000.00

107,620,657,000.00

Last Stop Rate (%)

2.50

3.50

7.50

Expected Stop Rate Range (%)

2.50 - 2.80

3.50 - 3.60

7.40 - 8.00

 

Investors are advised to position in bills that recorded the most expansions in yields across the curve and keep an eye out for bargains, following the PMA. 

 

Please see NT-Bills indicative rates below:

Maturity

Tenor (Days)

Rate (%) p.a.

Yield (%) p.a.

10-Feb-22

122

                  3.05

             3.08

31-Mar-22

171

                  4.23

             4.32

26-May-22

227

                  5.05

             5.21

14-Jul-22

276

                  5.94

             6.22

25-Aug-22

318

                  6.76

             7.18

9-Sep-22

333

                  7.06

             7.55

 Rates are valid till 01:45 pm today [11-Oct-21]

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


FGN Update: Market Sustains Bearish Run as Average Yield Expands 14bps W-o-W to 11.3%

As the week unraveled, the Debt Management Office ("DMO") released the bond auction calendar for the last quarter of 2021, reducing the volumes offered to N400.0 - N480.00bn from N450.00 - N540.00bn in Q3:2021. Additionally, the short and mid-term bonds to be re-opened changed from FEB-2028 and MAR-2036 to JAN-2026 and APR-2037 bonds.

 

Trading in the domestic bonds secondary market experienced a hand full of sell-offs as benchmark bonds experienced a 14bps increase in average yield W-o-W from 11.2% to 11.3%.

Precisely, average yield across short, medium, and long tenors expanded 25bps, 11bps and 10bps W-o-W respectively, with the 17-Mar-27 (69bps), 22-Jan-26 (45bps), and 23-Mar-25 (42bps) instruments recording the most sell-offs.


We expect more quiet trading sessions this week, as investors anticipate the PMA on Wednesday. However, due to reduced net issuances at the recent PMAs as well as the Q4:2021 calendar, we believe investors would take advantage of yield expansions, especially at the short-medium end of the curve.


Please see below FGN Bonds secondary market indicative rates:

Bond

Tenor (Years)

Yield (%)

Coupon (%)

Implied Price (N)

Apr-23

2

7.80

12.75

107.06

Mar-24

3

8.60

14.20

112.01

Mar-25

4

9.55

13.53

111.46

Jan-26

5

9.90

12.50

108.86

Mar-27

6

10.80

16.29

122.10

Feb-28

7

10.80

13.98

114.34

Jul-34

13

11.50

12.15

104.25

Mar-36

15

12.15

12.40

101.66

Apr-37

16

11.85

16.25

130.90

Apr-49

28

11.90

14.80

123.34

 

Rates are valid till 01:45 pm today [11-Oct-21]

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


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Corporate Bond: MTN Nigeria Communications Plc Announces the lunch of Series 2 Bond Issuance


We are pleased to announce the launch of MTN Nigeria Communications Plc's ("MTN Nigeria") up to N
89.999 billion Series 2 Bond Issuance under its N200 billion Bond Issuance Programme (the "Issue").

MTN Nigeria is well-positioned for the long term with its unmatched investments in its infrastructure - most expansive 2G, 3G, and 4G network, largest fiber network (about 30,000km) across Nigeria, largest physical and digital distribution platform, and wide range of spectrum holdings - coupled with the exciting Nigerian market opportunity.

Summary of the indicative terms of the proposed Offer is indicated below: 

Issuer

MTN Nigeria Communications PLC

Ratings (Issuer)

AAA (GCR); Aa (Agusto & Co.)

Ratings (Issue)

AAA (GCR); Aa (Agusto & Co.)

Joint Issuing House

Stanbic IBTC Capital Limited

Program Size

N200 billion

Issue Size

Up to N89.999 billion

Series

2

Interest Basis

Fixed-Rate

Ranking of Bonds

Senior unsecured obligation of MTN Nigeria

Tenor

10 Years

Principal Redemption

7-year moratorium, amortizing thereafter in 3 equal annual installments until maturity

Price Guidance

12.20% - 12.50%

Offer Open

Friday, 08 October 2021

Offer Close

Friday, 15 October 2021

Use of Proceeds

Optimization of finance and network expansion

Minimum Subscription

N10 million and in multiples of N1 million thereafter

Listing

FMDQ Securities Exchange Limited

The Offer is scheduled to close by 2.00 pm on Friday, 15 October 2021. 


Proshare Nigeria Pvt. Ltd.


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  5. Access Bank Dangles Fresh US$500m Eurobond Issue, Oversubscribed by 200%
  6. NT-Bills Update: Average Yield Contracts 30bps WoW to 5.29% Following Improved Demand
  7. October 2021 FGN Savings Bonds Offer for Subscription
  8. Ahead of Next T-Bills Auction Scheduled for 29th September 2021
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