NT-Bills Update: Average Yield Decline Marginally by 7bps WoW to 7.57%
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 as at 01:45pm yesterday (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 as at 01:45pm yesterday(19-Sept-22)
*Please note that the minimum subscription for FGN Bonds is ₦20,000,000.00
Nigeria’s debt hits N42.84tn amid revenue crisis
Domestic debt has pushed Nigeria’s total public debt stock from N41.60tn as of March 2022 to N42.84tn as of June of the same year, showing an increase of N1.24tn in three months, according to the Debt Management Office.
This was contained in a press statement published on the DMO’s website on Monday.
The statement read in part, “The Total Public Debt Stock, representing the Domestic and External Debt Stocks of the Federal Government of Nigeria, the 36 State Governments and the Federal Capital Territory, was N42.84tn ($103.31bn) as at June 30, 2022. The comparative figures for March 30, 2022, was N41.60tn ($100.07bn).”
According to the DMO, the Federal Government was unable to secure any foreign loans in the second quarter of 2022. The DMO noted that external debt remained the same at N16.61tn ($40.06bn) from Q1 to Q2 2022. It added that 58 per cent of external debt was concessional and semi-concessional loans from multilateral lenders such as the World Bank, International Monetary Fund, Afrexim, African Development Bank and bilateral lenders, including Germany, China, Japan, India and France.
It also noted that domestic debt rose to N26.23tn ($63.24bn) due to new borrowings by the government to part-finance the deficit in 2022 Appropriation {Repeal and Enactment) Act, as well as new borrowings by state governments and the FCT.
The DMO further said that the Total Public Debt to GDP as at June 30, 2022 was 23.06 per cent compared to the ratio of 23.27 per cent as at March 36 2022, adding that the debt service-to-revenue ratio remained high.
