Tepid Performance Persists as Average Yield Closes Flat at 1.5% WoW

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Monday, March 08, 2021 / 03:27 PM / Afrinvest Research / Header Image Credit: Getty Images


Proshare Nigeria Pvt. Ltd.


Last week, the Nigerian Treasury Bills ("NT-Bills") secondary market witnessed a decline in activity levels as average yield across all tenors closed on a flat note, marginally contracting 1bp W-o-W to 1.53% from 1.54% the previous week.

The mild participation of investors can be attributed to the improved rates experienced at the previous Primary Market Auction ("PMA"), as most investors cautiously stay on the side-lines in anticipation of higher yields in the short-term.

Consequently, yields remained unchanged across all tenors save for the 26-Aug-21 instrument which recorded a 3bps decline W-o-W due to slight buying interest. This week, the Apex bank is likely to roll over maturing bills worth N88.9bn through the NT-Bills PMA across the 91- (
N4.41bn), 182- (N14.0bn) and 364-Day (N70.50bn)tenors.

Please see below our PMA expectations

TENOR

91- DAY

182 - DAY

364 - DAY 

Offer Amount

4,041,000,000

14,000,000,000

70,050,000,000

Last Stop Rate

2.00%

3.50%

5.50%

Expected Stop Rate Range (%)

2.00% - 4.00%

3.00% -5.00%

5.00% - 7.000%

 
Going into the week, we expect N134.1bn worth of maturing Open Market Operations ("OMO") bills and N88.9bn worth of NT-Bills scheduled to hit the system and further bolster liquidity levels (N539.0bn in the positive as at Friday). 

Thus, we anticipate that investors deviate from the side-lines and take advantage of the gradually improving yields in the NT-Bills markets. In addition, we expect more demand for Commercial Papers as well as FGN bonds opportunities for investors with long-term horizons.

Please see indicative secondary market NT-Bills rates below:

Maturity

Tenor (Days)

Rate (%) p.a.

Yield (%) p.a.

26-Nov-20

57

2.55

2.56

14-Jan-21

106

3.40

3.43

28-Apr-21

210

4.05

4.15

13-May-21

225

4.25

4.36

15-Jul-21

288

4.64

4.82

Rates are valid till 01:45pm today (08-Mar-21)

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

Coronation Merchant Bank Limited Series 13 & 14 Commercial Paper


We are pleased to inform you that the Series 13 and 14 Commercial Paper issuance ("CP or the "Issuance"), under the Coronation Merchant Bank Limited ("Coronation MB") N100.0bn CP Issuance Programme is now open and scheduled to close on Wednesday, 10 March 2021.


 

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 corporate, 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
N253.35 billion and N34.57 billion respectively, as at 31st December 2019.

Please see below details of the offer:
 

Issuer:

Coronation Merchant Bank Limited

Series:

13

14

Tenor:

180-days

268-days

Target Size:

Up to N15.0bn

Discount Rate:

4.50%

6.00%

Implied Yield:

4.60%

6.28%

Offer Opens:

Friday, 5 March 2021

Offer Closes:

Wednesday, 10 March 2021

Funding Date:

Thursday, 11 March 2021

Issuer Rating:

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

Minimum Subscription:

Minimum of N5 million and multiples of N1,000 thereafter

Tax Consideration:

Free and clear of withholding taxes



Proshare Nigeria Pvt. Ltd. 


FGN Bonds Update: Bearish Performance as Average Yield Expands 13bps W-o-W to 9.37%


Trading in the domestic bonds secondary market started on a quiet note last week. As the week unraveled, investors got off the side-lines and positioned in opportunities across the curve. Accordingly, the FGN bonds market experienced 13bps increase in average yield W-o-W from 9.24% to 9.37%.


Precisely, average yield across medium and long tenors declined -30bps and -1bps W-o-W respectively while the short term bonds inched 87bps higher, with the 23-Mar-25 (+231bps), 22-Jan-28 (+181bps) and 14-Mar-24 (+108bps) instruments recording the most sell offs.

We expect more traction in the local bonds market due to expected uptrend in yields as the Debt Management Office ("DMO") aims to increase funding efforts of the federal budget. Our advice to investors is to gradually position in bonds that have witnessed the most sell-offs.


Please see indicative secondary market bonds rates below:

Bond

Tenor (Years)

Yield (%)

Coupon (%)

Implied Price (N)

Jan-22

2

1.90

16.39

118.82

Apr-23

3

2.05

12.75

126.68

Mar-24

4

2.25

14.20

139.52

Mar-25

5

3.05

13.53

143.58

Jan-26

6

4.95

12.50

134.85

Mar-27

7

5.90

16.29

155.16

Feb-28

8

6.35

13.98

144.46

Apr-29

9

6.40

14.55

153.11

Jul-34

14

7.75

12.15

136.86

Mar-36

16

7.80

12.40

140.91

Apr-37

17

7.90

16.25

176.36

Apr-49

29

8.30

14.80

170.63

Rates are valid till 01:45pm today (08-Mar-21)

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


Proshare Nigeria Pvt. Ltd.


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Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

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