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Market | Bonds & Fixed Income

NT-Bills Update: Average Yield Decline Marginally by 7bps WoW to 7.57%

Sep 19, 2022   •   by Afrinvest Research   •   Source: Afrinvest   •   eye-icon 243 views

Last week, the Nigerian Treasury Bills (“NT-Bills”) secondary market witnessed a bullish sentiment as investors anticipated Primary Market Auction (“PMA”) that held last Wednesday (14-Sept-22). As a result, the average yields dipped 7bps to close at 7.57% from 7.65% the previous week.
 
Furthermore, the medium-term instruments witnessed the most buying interest as its average yields declined 24bps, with the (09-Mar-22) contracting 276bps W-o-W.
 
At the PMA, the Apex bank offered a total of ₦159.05bn across the 91-, 182- and 364-Day instruments. The offer maintained a significant level of demand as it recorded a total bid-to-cover ratio of 2.91x (₦159.09bn offer vs. ₦407.30bn subscription). Stop rates on the 91-days remained unchanged, while 182-days expanded 15bps, and 364-days declined 25bps respectively.
 
Please see a detailed summary of the NT-Bills PMA below:



This week, we anticipate reactions to the adjusted stop rates at the PMA, therefore yields might remain bullish as investors continue to hunt for opportunities. Thus, we maintain our advice to investors to trade cautiously and take advantage of relatively attractive bills across the curve along with offers from corporates.
 
Please see indicative secondary market NT-Bills rates below:


Rates are valid till 01:45pm today (19-Sept-22)
*Please note that the minimum subscription for NT-Bills is ₦100,000.00
 
FGN Bond Update: Average Yield Declined by 24bps W-o-W to 12.73%
 
 The domestic bond secondary market reversed its run as market players cherry picked instruments across the curve in reaction to improved yields. As a result, average FGN bond yields declined 24bps W-o-W to 12.73% from 12.97% the previous week.
 
A further breakdown shows that average yields on short and medium tenored instruments (11.47% and 12.78%) witnessed the most buying interest (-79bps W-o-W) and (-3bps W-o-W) as yields on APR-2023, MAR-2024 and MAR-2027 declined 383bps, 45bps and 22bps W-o-W respectively.
 
Today, the Debt Management office (“DMO”) is scheduled to offer N225.0bn across the MAR 2025, APR 2032 and APR 2037 maturities.
 
Please see below details of the FGN bond PMA offer: 

BOND

13.53% FGN MAR 2025

12.50% FGN APR 2032

16.24% FGN APR 2037

(Re-opening)

(Re-opening)

(Re-opening)

Amount on Offer (₦' bn)

                           75,000,000,000.00

                           75,000,000,000.00

                          75,000,000,000.00

Original Tenor

7-Year

10-Year

20-Year

Time-to-Maturity

2 years, 4 months

9 years, 7 months

14 years, 7 months


Going into the week, we expect activity to remain quiet as focus shifts to the scheduled PMA. However, this does not rule out the possibility of demand channelled to the secondary market post-PMA. Thus, we maintain our advice that investors take advantage of maturities with relatively attractive yields across the curve.
 
Please see below FGN Bonds secondary market rates


Rates are valid till 01:45pm today (19-Sept-22)
*Please note that the minimum subscription for FGN Bonds is ₦20,000,000.00

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