Last week, the Nigerian Treasury Bills (“NT-Bills”) secondary market sustained its bearish streak as yields expanded by 52bps W-o-W to settle at 5.31% from 4.79% the previous week due to tight system liquidity.
Further analysis shows that average yields on the short- and medium-term advanced +112bps and +96bps to close at 4.99% and 5.45% W-o-W respectively. Specifically, the 11-Aug-22, 13-Oct-22 and 27-Oct-22 expanded the most as their yields rose +187bps, +139bps and +121bps W-o-W respectively.
At the PMA, the Apex bank offered a total of ₦174.09bn 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 1.89x (₦174.09bn offer vs. ₦328.45bn subscription). Furthermore, stop rates on the 91-Day maturity dipped 9bps, while stop rates for 182- and 364- day instruments remained unchanged, as average marginal rates dipped to 4.09% from 4.12% at the last auction.
Please see a detailed summary of the NT-Bills PMA below:
Auction Date | 29-Jun-22 | 29-Jun-22 | 29-Jun-22 |
Allotment / Issue Date | 30-Jun-22 | 30-Jun-22 | 30-Jun-22 |
Tenor | 91-Day | 182-Day | 364-Day |
Offer Amount (₦' bn) | 13,881,555,000 | 2,163,900,000 | 158,040,241,000 |
Subscription (₦' bn) | 13,134,441,000 | 17,357,000,000 | 297,960,072,000 |
Allotment (₦' bn) | 12,283,050,000 | 17,156,000,000 | 168,211,622,000 |
Range of Bid Rates (%) | 2.40 – 7.25 | 3.40 – 5.00 | 5.50 – 9.25 |
Previous Stop rates (%) | 2.49 | 3.79 | 6.07 |
Stop Rates (%) | 2.40 | 3.79 | 6.07 |
Subscription ratio | 0.9x | 8.0x | 1.9x |
Allotment ratio | 0.9x | 1.0x | 0.6x |
This week, the Federation Account Allocation Committee (FAAC) inflow that came in late Friday should boost demand early this week, albeit mild as system liquidity level remains tight, hence yield might turn bullish. Thus, we advise investors to trade cautiously and take advantage of attractive bills across the curve along with offers from Corporates.
Please see indicative secondary market NT-Bills rates below:
Maturity | Tenor (Days) | Gross Rate (%) p.a. | Yield (%) p.a. |
11-Aug-22 | 38 | 4.90 | 4.93 |
25-Aug-22 | 52 | 4.90 | 4.93 |
8-Sep-22 | 66 | 5.71 | 5.77 |
13-Oct-22 | 101 | 5.60 | 5.69 |
10-Nov-22 | 129 | 5.75 | 5.87 |
9-Feb-23 | 220 | 5.59 | 5.78 |
Rates are valid till 01:45 pm today (04-Jul-22)
*Please note that the minimum subscription for NT-Bills is ₦100,000.00
*Please note that rates quoted above are Net withholding tax (10%)
FGN Bonds Update: Average Yield Expands Marginally by 3bps W-o-W to 11.18%
Last week, performance at the domestic bonds secondary market witnessed a mixed sentiment as it took a bearish turn from last week. Consequently, average yield expanded 3bps W-o-W to settle at 11.18% from 11.14% the previous week.
Specifically, average yields on medium and long tenored instruments (11.06% and 12.63%) expanded the most due to selloffs on the MAR-2050 (+16bps) and JUL-2045(+54bps) instruments. On the flipside, the short-term instruments witnessed the most buying interest as yield declined 4bps to close at 9% W-o-W.
Going into the week, we expect weak sentiments in the FGN bonds secondary market to persist as investors hunt for bargains, particularly on attractive short to medium term bonds on the back of the mild sell-offs witnessed last week. Investors are advised to trade cautiously and cherry pick bonds with attractive yields and lower prices.
Please see below FGN bonds secondary market rates:
Maturity | Tenor (Years) | Yield (%) | Coupon (%) | Implied Price (N) |
Mar-24 | 1.7 | 7.20 | 14.20 | 110.94 |
Mar-25 | 2.7 | 9.29 | 13.53 | 109.94 |
Jan-26 | 3.5 | 9.42 | 12.50 | 109.11 |
Mar-27 | 4.7 | 9.97 | 16.29 | 123.22 |
Feb-28 | 5.6 | 10.05 | 13.98 | 116.58 |
Jul-34 | 12.0 | 11.47 | 12.15 | 104.36 |
Mar-36 | 13.7 | 11.80 | 12.40 | 103.99 |
Apr-37 | 14.8 | 11.80 | 16.25 | 130.73 |
Apr-49 | 26.8 | 12.29 | 14.80 | 119.54 |
Rates are valid till 01:45pm today (04-Jul-22)
*Please note that the minimum subscription for FGN Bonds is ₦20,000,000.00