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Market | Bonds & Fixed Income

NT-Bills Update: The Bears Halt the Bulls as Average Yields Expand 2bps WoW to 1.49%

Feb 06, 2023   •   by   •   Source: FBNQuest   •   eye-icon 200 views

The bullish run earlier witnessed in the Nigerian Treasury Bills (“NT-Bills”) secondary market came to a halt as the average yield expanded 2bps W-o-W to settle at 1.49% (vs 1.47% last week).


It was a mixed performance across the yield curve with strong selloffs witnessed across the short, mid, and long ends of the curve. Specifically, the 30-Mar-2023, 08-Jun-2023, and 9-Nov-23 bills witnessed significant selloffs as their average yields expanded 67bps 41bps and 77bps respectively. Whilst the 16-Mar-23 and 23-Nov-23, bills enjoyed the most demand as their average yield declined 55bps and 10bps respectively.


On Wednesday (08-Feb-23), the Apex bank is scheduled to roll over maturing bills worth N217.06bn at the NT-Bills Primary Market Auction (“PMA”) across the 91-, 182-, and 364-day tenors. 

 
Find below our PMA expectations:

Auction Date

08-Feb-23

08-Feb-23

08-Feb-23

Allotment Date

09-Feb-23

09-Feb-23

09-Feb-23

Tenor

91-Day

182-Day

364-Day

Offer Amount (₦’)

1,710,640,000

1,243,542,000

214,139,140,000

Last Stop Rate (%)

0.29

1.80

4.78

Expected Stop Rate Range(%)

1.00% - 2.00

3.00% - 4.500

5.00% - 7.00

 

This week, we anticipate bullish sentiments on the back of robust system liquidity (which stood at N799.57bn as of Friday 03-Feb-23). Hence, we advise investors to trade cautiously and take advantage of attractive bills across the curve, particularly long dated instruments with an eye on offers from corporates.
 
Find below indicative secondary market NT-Bills rates:

Maturity

Tenor (Days)

Rate (%) p.a.

Yield (%) p.a.

8-Jun-23

122

2.30

 2.30

10-Aug-23

185

3.20

 3.25

26-Oct-23

262

4.10

 4.20

23-Nov-23

290

4.60
  

 4.80

28-Dec-23

325

5.20

 5.45

11-Jan-24

339

5.50

 5.80

Rates are valid till 01:45pm today (06-Feb-23)
*Please note that the minimum subscription for NT-Bills is N100,000.00
 
FGN Bond Update: Bearish Run Resurfaces as Average Yield Expands 13bps W-o-W to 13.24%
Like the treasury bill market, the bears dominated the domestic bond market with significant selloffs witnessed across the yield curve whilst buying interest continued at the short end of the curve. Thus, expanding average bond yields by 13bps W-o-W to settle at 13.24% (vs 13.11% last week).
 
The MAR-2024, APR-2029, and APR-2049 maturities witnessed the most selloffs as their average yield expanded 25bps,27bps, and 65bps at the short, mid, and long end of the curve respectively.


Demand witnessed on the short end of the curve particularly were the MAR-2025, and JAN-2026 maturities as their average yield declined by 21bps and 17bps respectively.
 
At the FGN bond auction held last week Monday, the Debt Management Office (DMO) offered for sale bonds worth N360.0bn across four re-opening instruments (FEB-2028, APR-2032, APR-2037, APR-2049). The primary auction saw an oversubscription of +224% or N805.16bn with an eventual allotment of 82% or N662.6bn. The buying interests suggest a robust investor’s confidence amidst high inflation expectations and hawkish monetary policy.
 
Find below detailed summary of the FGN Bond Auction:

BONDS

13.98% FGN FEB 2028

12.50% FGN   APR 2032

16.2499% FGN APR 2037

14.80% FGN APR 2049

(Re-opening)

(Re-opening)

(Re-opening)

(Re-opening)

Term to maturity

5 Years, 1Month

9 Years, 3Months

14 Years, 3Months

26 Years, 3Months

Amount Offered (N)Mn

90,000.00

90,000.00

90,000.00

90,000.00

Total Subscription (N)Mn

191,980.00

91,140.00

260,470.00

261,570.00

Amount Allotted: (N)Mn

144,530.00

65,040.00

232,470.00

220,570.00

Range of Bid Rates (%)

11.00 – 13.50

14.00 – 15.50

15.00-16.50

14.00-15.50

Stop Rates (%)

14.00

14.90

15.80

15.90

Subscription Ratio:

2.13x

1.01x

2.89x

2.91x

Allotment Ratio

0.75x

0.71x

0.89x

0.84x




Going into the week, we anticipate that the robust liquidity will trigger buying interest. We therefore advise investors to take advantage of maturities with relatively attractive yields across the curve, particularly at the short and medium end of the curve.
 
Find below FGN bond secondary market rates:

Bond

Tenor (Years)

Yield (%)

Coupon (%)

Implied Price (N)

Mar-24

1.1

7.18

14.20

107.30

Mar-25

2.1

9.72

13.53

107.14

Jan-26

2.9

11.23

12.50

103.11

Mar-27

4.1

12.54

16.29

111.72

Feb-28

5.0

13.09

13.98

103.19

Jul-34

11.4

13.88

12.15

90.20

Mar-36

13.1

14.08

12.40

90.03

Jan-42

18.9

14.53

13.00

110.15

Mar-50

27.1

14.49

12.98

102.02

Rates are valid till 01:45pm today (06-Feb-23)
*Please note that the minimum subscription for FGN Bond is N20, 000,000.00

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