NT-Bills Secondary Market Turns Bearish as Average Yield Expands 1bps WoW to 4.15%
Last week, the Nigerian Treasury Bills (“NT-Bills”) secondary market took a marginal bearish turn. The week started on a quiet note and maintained minimal trading activities despite buoyant system liquidity (N512.3bn long as at Thursday). Consequently, average yield advanced 1bp W-o-W to close 4.15% from 4.14% the previous week.
In more details, average yields on the short- and medium-term instruments traded flat throughout the week, while the long-term instruments expanded 2bps W-o-W, with the 25-Aug-2022 (26bps) witnessing the most activity.
On Wednesday (09-Feb-22), the Apex bank is scheduled to roll over maturing bills worth N98.0bn at the NT-Bills Primary Market Auction (“PMA”) across the 91-, 182-, and 364-Day tenors.
Please see below our PMA expectations:
| Auction Date | 09-Feb-22 | 09-Feb-22 | 09-Feb-22 |
| Allotment Date | 10-Feb-22 | 10-Feb-22 | 10-Feb-22 |
| Tenor | 91-Day | 182-Day | 364-Day |
| Offer Amount (N) | 4,116,905.00 | 3,745,689.00 | 90,148,205.00 |
| Last Stop Rate (%) | 2.48% | 3.30% | 5.40% |
| Expected Stop Rate Range (%) | 2.00% – 2.50% | 3.00% – 3.50% | 4.00% – 5.50% |
Going into the week, we expect sustained tepid sentiments at the beginning of the week as investors anticipate Wednesday’s PMA. In addition, system liquidity is expected to be bolstered by scheduled NT-Bills maturities worth N98.0bn on Thursday. Thus, we advise investors to trade cautiously prior to the outcome of the PMA.
Please see indicative secondary market NT-Bills rates below:
| Maturity | Tenor (Days) | Rate (%) p.a. | Yield (%) p.a. |
| 31-Mar-22 | 52 | 3.30 | 3.32 |
| 26-May-22 | 108 | 4.70 | 4.77 |
| 14-Jul-22 | 157 | 5.83 | 5.98 |
| 8-Sep-22 | 213 | 6.45 | 6.70 |
| 10-Nov-22 | 276 | 6.84 | 7.21 |
Rates are valid till 01:45 pm today (07-Feb-22)
*Please note that the minimum subscription for NT-Bills is N100, 000.00
FGN Bonds Update: Average Yield Remains Unchanged W-o-W to close at 13.04%
The bond secondary market traded on a quiet note as investors continued to trade cautiously last week while awaiting clarity on the direction of yields. As a result, average yield remained unchanged at 13.04%.
Particularly, average yields on short-, medium-, and long-term maturities closed at 13.87%, 12.68% and 12.53% respectively.
This week, we expect a mild improvement in demand levels on the back of the liquidity boost and therefore advise investors to trade cautiously while possibly positioning in bonds with relatively attractive yields.
Please see indicative secondary market bonds rates below:
| Maturity | Tenor (Years) | Yield (%) | Coupon (%) | Implied Price (N) |
| Apr-23 | 2 | 6.30 | 12.75 | 107.42 |
| Mar-24 | 3 | 8.30 | 14.20 | 111.14 |
| Mar-25 | 4 | 9.30 | 13.53 | 111.22 |
| Jan-26 | 5 | 10.50 | 12.50 | 106.33 |
| Mar-27 | 6 | 10.70 | 16.29 | 121.53 |
| Feb-28 | 7 | 11.15 | 13.98 | 112.19 |
| Jul-34 | 13 | 11.75 | 12.15 | 102.56 |
| Mar-36 | 15 | 12.05 | 12.40 | 102.32 |
| Apr-37 | 16 | 12.05 | 16.25 | 128.91 |
| Apr-49 | 28 | 12.20 | 14.80 | 120.41 |
Rates are valid till 01:45pm today (07-Feb-22)
*Please note that the minimum subscription for FGN Bonds is N20,000,000.00
Going into the week, we expect increased buying interest in the secondary market on the back of improved liquidity levels in the system which stood at N460.6bn as of Friday, 27th January.
Thus, we advise investors to take advantage of maturities with relatively attractive yields across the curve, particularly at the short end.
