NT-Bills Average Yield Up 7bps WoW to 3.9%; Coronation MB CP Available


Monday, February 24, 2020 / 12:43 PM / Afrinvest Research / Header Image Credit: UBA


The performance in the Nigerian Treasury Bills ("NT-Bills") secondary market last week turned bearish as we saw some local investors sell-off their NT-Bills ahead of the FGN bond auction last Wednesday, while other locals stood on the sidelines, indifferent, amid unattractive secondary market offerings. Consequently, average yield on all instruments trended 7bps northwards W-o-W to close at 3.9%. Long-term and Short-term bills suffered selloffs advancing 1.0% and 0.3% respectively. On the flipside, the medium-term NT-Bills dipped 14bps as slight buying interest persisted.


The Apex bank also conducted the usual Open Market Operation ("OMO") auction last week mopping up (N300.0bn) of the excess liquidity in the financial system (N1.2tn from all maturing investments NT-Bills, OMO and FGN bond). As expected, due to high demand, stop rates compressed slightly by 2bps and 1bp on the 362-Day, 180-Day tenors to close at 13.02% and 11.59% respectively while, the 89-Day instrument closed at 11.45% from a "No-Sale" at the previous auction.


Looking ahead, investors anticipate a Primary Market Auction ("PMA") this Wednesday, where the CBN is scheduled to rollover maturing NT-Bills worth N111.1bn which we believe will be significantly over subscribed due to expected buoyant liquidity on OMO and NT-Bills maturities worth N1.1tn and unattractive secondary market alternatives. Thus, a slight moderation in stop rates and high oversubscription is very likely.


This week, we foresee quiet trading sessions at the start of the week - despite liquidity levels of (N305.5bn long as at Friday) and expected combined maturing investments of (N1.1tn) - as locals hold for slightly more attractive medium-long-term offers at the PMA. Local investors are therefore advised to either take position during the first few soft trading sessions in attractive secondary market NT-Bills that witnessed sell offs last week or position at expected primary offerings (PMA and Commercial Papers "CP").


FGN Bonds Market Update: Average Yield Declines 30bps W-o-W as Stop Rates at the FGN Bond PMA Contracts


Last week, performance in the local bond market was bullish due to high demand pressured by buoyant liquidity levels. The most buying interest was witnessed on the 18-APR-37 (-25bps) and 15-JUL-21 (-19bps) bonds.


As expected, all instruments at the PMA conducted by the Debt Management Office ("DMO") were oversubscribed. The DMO however allotted only 38.0%, 31.0% and 18.0% of subscriptions on the 5-Year,10-Year and 30-Year re-opened offerings respectively.


Please see a summary of the auction outcome below:


12.75% FGN APR 2023

14.55% FGN APR 2029

14.80% FGN APR 2049


3 Years, 2 months

9 Years, 2 months

29 Years, 2 months

Offer Amount (N)




Subscription (N)




Sales (N)




Previous Rates




Stop Rates




Bid-to-Cover Ratio




Allotment Ratio




Going into the week, we expect more quiet trading sessions but believe the bullish run will persist as investors with maturing funds continue to seek relatively higher yielding safe investments. We therefore maintain our recommendation for investors to look out for attractive opportunities in bonds space as well as primary offerings in money market instruments. 

Proshare Nigeria Pvt. Ltd.


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Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

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