Average T-Bills Rate Closed Up at 13.1% Following Sell-Offs by Investors

Proshare

Monday, November 19, 2018 03:48 PM / Afrinvest

 

The Treasury Bills (“T-Bills”) secondary market traded last week on a quiet note as investors sold off their bills in anticipation of the more attractive rates at the Primary Market Auction (“PMA”) and Open Market Operations (“OMO”). As a result, average rate across tenors advanced 22bps W-o-W to settle at 13.1% from 12.9% recorded in the previous week. 

The long-term maturities advanced the most up 17bps due to sell-offs particularly on the 18-Jul-19 (+0.8%) bill while the short and medium tenored bills advanced marginally by 1bp and 2bps respectively on the back of sell-offs in the 29-Nov-18 (+0.9%) and 14-Mar-19 (+0.4%) maturities. 

At the PMA on Wednesday, the CBN offered a total of N128.2bn across the 91-day, 182-day and 364-day tenors. This offer was met with strong demand as a total subscription of N403.9bn indicated a bid-to-cover ratio of 3.2x. Please see details below:


Auction Date

14-Nov-18

14-Nov-1818

14-Nov-18

Allotment / Issue Date

15-Nov-18

15-Nov-18

15-Nov-18

Tenor

(91-Day)

(182-Day)

(364-Day)

Offer Amount (N)

3,384,180,000

16,920,900,000

107,938,478,000

Total Subscription (N)

3,682,039,000

71,961,839,000

328,263,483,000

Allotment (N)

3,384,180,000

16,920,900,000

107,938,478,000

Range of Bid Rates (%):

10.8000 - 12.0000

11.5000 - 14.0000

13.7000 - 15.9500

Stop Rates (%):

10.9500

13.1600

14.4500

Bid-to-Cover Ratio:

            1.1x

             4.3x

           3.0x

Allotment Ratio:

            0.9x

             0.2x

           0.3x

 

On Thursday, the Apex bank sustained its liquidity management, conducting OMO auction once this week with a total of N450.0bn on offer across the 77, 182 and 364-day tenors. This offer was met with a total subscription of N468.0bn, indicating a bid-to-cover ratio of 1.0x which is an improvement from the 0.7x bid-to-cover ratio recorded at the last auction. 

This week, we anticipate that the CBN will maintain its regular liquidity mop-up (N146.9bn short as at Friday) as OMO maturities worth N397.7bnn and bond coupon of N9.37bn respectively are scheduled to hit the financial system. On the back of an expected buoyant system liquidity, we expect to see more activities in the T-Bills market leading to a moderate decline in yields. We advise investors to investment in short term instruments (Dec. & Jan. Bills) in view of expected rise in T-Bills discount rates as electioneering kicks in fully. 

 

Please see below indicative T-Bills rates for today:

Maturity

Tenor (Days)

Rate (%) p.a.

Yield (%) p.a.

20-Dec-18

31

9.20

9.27

31-Jan-19

73

10.90

11.14

28-Feb-19

101

11.50

11.88

02-May-19

164

11.70

12.35

31-Oct-19

346

13.80

15.88

OMO Auction

c.200

12.50

13.42

OMO Auction

c.350

14.00

16.17

 

Bearish Streak Persists as Investors Anticipate Bond Auction on Wednesday 

Last week, the domestic bonds market extended its bearish streak as investors sell-offs persisted on the short-term maturities. Consequently, average yield across tenors advanced 17bps to 15.2% from 15.1% recorded in the previous week buoyed by the improved yields in some of the 2020s maturities. 

Going into the week, we expect this bearish trend to persist as investors anticipate the upcoming Bond auction on Wednesday where the DMO is expected to raise N115.0bn across the 5, 7 and 10-year instruments. Please see details below:


Bond Name

12.75% FGN APR 2023 (Re-opening)

13.53% FGN MAR 2025 (Re-opening)

13.98% FGN FEB 2028 (Re-opening)

Term-To-Maturity

4 Years, 5 Months

6 Years, 4 Months

9 Years, 3 Months

Offer Amount (N'bn)

35.0

35.0

45.0

 

Thus, we advise investors to take advantage of the attractive yields in the bonds market as we anticipate further improvements in yields.

 

Please see below indicative Bond rates for today:

Bond

Tenor (Years)

Yield (%)

Coupon (%)

Implied Price (N)

Feb-20

2

14.25

15.54

101.35

Jul-21

3

15.10

14.50

98.67

Jan-22

4

14.60

16.39

104.37

Mar-24

6

15.10

14.20

96.73

Jan-26

8

15.45

12.50

87.42

Mar-27

9

15.50

16.29

103.56

Feb-28

10

15.81

13.98

92.03

Jul-34

16

15.63

12.15

79.79

Mar-36

18

15.50

12.40

81.45

Apr-37

19

15.47

16.25

104.67

 

 Proshare Nigeria Pvt. Ltd.


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