Average T-Bills Yield Closes Flat at 13.1%

Proshare

Monday, May 06, 2019  / 01:18PM / Afrinvest Research

 

Activities in the Treasury Bills (“T-Bills”) secondary market last week were generally lukewarm as average yield settled at 13.1% W-o-W, albeit marginally increasing 2bps. Accordingly, average yields on the medium- and long-term bills inched up 1bps and 8bps W-o-W respectively while the short-term bills tanked 15bps W-o-W as major buying interest was witnessed in the 06-Jun-19 (-1.2%) instrument.

 

At the Primary Market Auction (“PMA”) last Thursday, the CBN successfully offered N109.7bn worth of bills across 91-, 182- and 364-Day tenors at respective stop rates of 10.29%, 12.49% and 12.74%. The 91- and 364-Day instruments were oversubscribed (1.6x) and (4.1x) respectively, while the medium-term bill recorded a 0.7x undersubscription.

 

Please see a detailed summary in the table below:

Auction Date

2-May-19

2-May-19

2-May-19

Allotment / Issue Date

2-May-19

2-May-19

2-May-19

Tenor

91-Day

182-Day

364-Day

Offer Amount (N)

28,018,956,000

43,522,527,000

38,167,692,000

Total Subscription (N)

43,719,426,000

29,848,707,000

157,628,175,000

Allotment (N)

28,018,956,000

10,615,398,000

71,074,821,000

Range of Bid Rates (%)

9.0000-11.0000

11.8000-13.4664

12.1000-14.0237

Stop Rates (%)

10.00

12.49

12.77

Previous Stop Rates (%)

10.15

12.50

12.74

Bid-to-Cover Ratio

1.6x

0.7x

4.1x

Allotment Ratio

0.6x

0.4x

0.5x

 

Going into the week, we expect to see a boost in system liquidity (N246.1bn positive as at Friday last week) on the back of OMO maturities worth N196.4bn and an expected FAAC allocation during the week. Consequently, we anticipate that the CBN will accelerate its excess liquidity mop-ups via OMO auctions and a possible contraction yields across the curve. Therefore, Investors are advised to take advantage of bills with attractive yields as well as potential OMO offerings.

 

Please see indicative secondary market T-Bills rates below:

Maturity

Tenor (Days)

Rate (%) p.a.

Yield (%) p.a.

30-May-19

24

8.65

8.70

18-Jul-19

73

9.50

9.68

15-Aug-19

101

10.45

10.76

5-Sep-19

122

11.71

12.19

3-Oct-19

150

11.76

12.36

14-Nov-19

192

11.71

12.48

19-Dec-19

227

12.05

13.03

30-Jan-20

269

12.05

13.22

27-Feb-20

297

11.99

13.29

OMO Auction

c.100

10.50

10.81

OMO Auction

c.200

12.00

13.30

OMO Auction

c.300

12.50

14.20

 

FGN Bonds Market Update: Bearish Run Reversed as Average Yield Tanks Marginally 4bps W-o-W

The bond market slightly reversed its bearish outlook as average yield marginally trended 4bps southwards to settle at 14.1% W-o-W as mild buying interest was witnessed across the various segments of the curve with strong demand witnessed on the Oct-19 (-38bps) and Nov-19 (-28bps) instruments.

Going into the week, we anticipate an improvement in the bond market performance as we expect average yields to contract at the end of the trading week. Thus, investors are advised to trade cautiously while awaiting clear policy directions.

 

Please see indicative bond rates below:

Bond

Tenor

Yield (%)

Coupon Rate (%)

Implied Price

21-Jul

2

14.2

14.5

100.5

22-Jan

3

14

16.39

105.33

23-Apr

4

14.2

12.75

95.62

24-Mar

6

14.2

14.2

100.14

25-Mar

8

14.2

13.53

97.23

26-Jan

9

14.3

12.5

92.49

27-Mar

10

14.4

16.2884

108.98

28-Feb

16

14.6

13.98

97.12

Jul-34

18

14.3

12.1493

86.73

Mar-36

19

14.4

12.4

87.58

Apr-37

19

14.2

16.2499

113.06

 


Proshare Nigeria Pvt. Ltd.


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 Proshare Nigeria Pvt. Ltd.

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