NT-Bills Update: Bearish Run Persists as Average Yield Expands 15bps WoW to 4.79%

In line with our expectations last week, the Nigerian Treasury Bills (“NT-Bills”) secondary market maintained its bearish run as average yield expanded 15bps W-o-W to settle at 4.79% from 4.64% the previous week.

In more detail, the short- and medium-term instruments witnessed the most selloffs as their average yields (3.88% and 4.49%) expanded 39bps to 3.88% and 31bps to 4.49% respectively. Specifically, the 11-Oct-22 (+76bps W-o-W), 25-Aug-22 (+58bps W-o-W) and 24-Nov-22 (+49bps W-o-W) expanded the most. Conversely, the long- term instruments enjoyed the most buying interest as its average yield dipped 23bps to close at 5.47% WoW.

On Wednesday (29-Jun-22), the Apex bank is scheduled to roll over maturing bills worth ₦174.09bn at the NT-Bills Primary Market Auction (“PMA”) across the 91-, 182-, and 364-Day tenors.

Please see below our PMA expectations:

Going into the week, we expect that bullish sentiments resurface towards the end of the week as investors cover their unfilled positions. Also, system liquidity (which stood at ₦445.0bn short as of Friday) due to about ₦300b settlement for Retail SMIS Auction on Friday. In the absence of any major inflow this week, we expect yields to rise further notwithstanding the NT-Bills maturities worth ₦174.09bn on Thursday which will be rolled over. Thus, we advise investors to trade cautiously prior to the outcome of the PMA and take advantage of attractive bills across the curve along with offers from corporates.

Please see indicative secondary market NT-Bills rates below:

Rates are valid till 01:45 pm today (27-Jun-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 Dips Marginally by 5bps W-o-W to 11.14%

The domestic bonds secondary market recorded a bullish run last week as investors anticipated the FGN bond auction which was conducted last Monday (20-Jun-22). Consequently, average FGN Bond yields shed 5bps W-o-W to settle at 11.14% from 11.19% the previous week.

Specifically, average yields on short and long tenored instruments (9.04% and 12.57%) witnessed the most buying interest (-4bps W-o-W) and (-11bps W-o-W) as yields on MAR-2024, JUL-2034 and APR-2037 contracted -19bps, -14bps and -28bps W-o-W respectively.

At the PMA, the Debt Management Office (“DMO”) offered a total of ₦225.0bn on the FGN MAR 2025, FGN APR 2032 and FGN JAN 2042 instruments. The offers enjoyed a significant level of demand as it recorded a total bid-to-cover ratio of 2.4x. Furthermore, marginal rates on the 2025, 2032 and 2042 instruments expanded 10bps, 5bps and 15bps respectively.

Please see a detailed summary of the FGN bond PMA below:

Going into the week, we expect active trading sessions as investors continue to fill lost bids from the PMA. We therefore advise investors to take advantage of maturities with relatively attractive yields across the curve.