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NT-Bills Update: Bearish Sentiment Persists as Average Yield Rose by 76bps WoW to 11.04%

Oct 31, 2022   •   by Afrinvest Research   •   Source: Afrinvest   •   eye-icon 213 views

The Nigerian Treasury Bills (“NT-Bills”) secondary market closed the previous week on a bearish note, as average yield increased by 76bps to close at 11.04% from 10.28% recorded in the past week. 

 

In details, sell-offs were witnessed, particularly at the short end of the curve, as average yield rose to 11.51% (+380bps), evident in the 10-Nov-22 maturity, as yield expanded 723bps to settle at 13.16% W-o-W. However, persistent buy interest was witnessed at the medium and long tenored maturities, as average yield dipped by 11bps and 29bps to close at 9.33% and 12.55% respectively. Specifically, the 27-Apr-23 and 14-Sep-23 dipped the most by 224bps and 74bps respectively.

 

At the Primary Market Auction (PMA), last Wednesday 26-Oct-22, the Apex bank offered a total of ₦240.26bn across the 91-, 182- and 364-Day instruments. Weak demand was witnessed as the offer was undersubscribed recording an average bid-to-cover ratio of 1.18x (₦240.26bn offer vs. ₦136.92bn total subscription).  However, stop rates across the 91days, 182days and 364days climbed higher to stop at 6.50%, 8.05% and 14.50% from 6.47%, 7.90% and 13.00% respectively. 

 

Please see a detailed summary of the NT-Bills PMA below: 

Auction Date

26-Oct-22

26-Oct-22

26-Oct-22

Allotment / Issue Date

27-Oct-22

27-Oct-22

27-Oct-22

Tenor

91-Day

182-Day

364-Day

Offer Amount (₦' bn)

31,693,361,000.00

58,228,250,000.00

150,341,706,000.00

Subscription (₦' bn)

2,120,458,000.00

10,613,593,000.00

124,228,417,000.00

Allotment (₦' bn)

1,737,750,000.00

10,116,400,000.00

97,329,781,000.00

Range of Bid Rates (%)

6.4600 - 9.0000

7.8900 - 10.0000

11.0000 - 17.0000

Previous Stop rates (%)

6.47 

 7.90 

 13.00 

Stop Rates (%)

6.50

8.05

14.50

Subscription ratio

0.1x

0.2x

0.8x

Allotment ratio

0.8x

1.0x

0.8x

 

Going into the week, we expect to see more buying interest, on the back of improved yield at the PMA auction. Also, system liquidity level (which stood at ₦357.12bn positive as of Friday, 28-Oct-22) is expected to be bolstered by OMO maturities worth about ₦20.00bn. Thus, we advise investors to continue to position in relatively attractive bills across the yield curve, while also remaining alert for possible corporate offerings.

 

Please see indicative secondary market NT-Bills rates below: 

Maturity

Tenor (Days)

Rate (%) p.a.

Yield (%) p.a.

29-Dec-22

59

                 6.20 

                    6.26 

12-Jan-23

73

                 7.10 

                    7.20 

9-Mar-23

129

                 7.70 

                    7.92 

13-Apr-23

164

                 7.85 

                    8.14 

11-May-23

192

                 6.85 

                    7.11 

10-Aug-23

283

                 8.40 

                    8.99 

12-Oct-23

346

                 8.85 

                    9.66 


Rates are valid till 01:45pm today (31-Oct-22)

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

 

FGN Bond Update: Bearish Run Sustained as Average Yield expanded by 16bps W-o-W to 14.31%

Bearish sentiment was sustained at the domestic bond secondary market, as it closed the previous week on a negative note. As a result, average FGN Bond yield expanded by 16bps W-o-W to 14.31% from 14.14% in the past week.

 

Accordingly, sell-offs were witnessed at the medium and long end of the curve, as average yield advanced by 17bps and 48bps to close at 14.44% and 14.92% respectively. This is evident in the APR-2049 and the APR-2029 maturities as yields expanded by 126bps and 20bps W-o-W respectively.

 

Going into the week, we expect sustained, albeit reduced sell-offs due to improved system liquidity. We therefore advise investors to take advantage of relatively attractive offers in the secondary market particularly at the short and medium end of the curve.

 

Please see below FGN bond secondary market rates:

Bonds

Tenor (Years)

Yield (%)

Coupon (%)

Implied Price (N)

Mar-24

1.3

           13.45 

            14.20 

                  100.87 

Mar-25

2.3

           13.50 

            13.53 

                  100.02 

Jan-26

3.2

           13.80 

            12.50 

                    96.66 

Mar-27

4.3

           13.60 

            16.29 

                  108.61 

Feb-28

5.3

           13.75 

            13.98 

                  100.79 

Jul-34

11.7

           13.85 

            12.15 

                    90.23 

Mar-36

13.3

           13.90 

            12.40 

                    90.96 

Apr-37

14.4

           15.15 

            16.25 

                  106.36 

Jan-42

19.2

           14.22 

            13.00 

                  103.97 


Rates are valid till 01:45pm today (31-Oct-22)

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

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