Quiet Sessions as Average Yield Marginally Gained 2bps WoW to 4.41%

Last week at the Nigerian Treasury Bills (“NT-Bills“) secondary market, activity levels were muted as most instruments closed flat W-o-W. This was on the back of investors digesting the recently released CPI/Inflation data for the month of December 2021 (which grew at 15.6% Y-o-Y). Consequently, average yields expanded 2bps W-o-W to close at 4.41% (from 4.39% the previous week).

In more detail, the average yield at the medium- and long-end of the curve closed flat for the week, while the short-end of the curve gained 11bps W-o-W to close at 3.23%.

This week, a total of N129.3bn worth of maturing NT-Bills will be offered by the Apex Bank in a Primary Market Auction (“PMA”) on Wednesday, 26-Jan-22.

Please see our PMA expectations below:

Auction Date	26-Jan-22	26-Jan-22	26-Jan-22
Allotment Date	27-Jan-22	27-Jan-22	27-Jan-22
Tenor	(91-Day)	(182-Day)	(364-Day)
Value on Offer (₦’000)	2,684,833.00	3,536,200.00	123,113,735.00
Previous Stop Rates (%)	2.50	3.44	6.99
Expected Stop Rate Range (%)	2.45 – 2.50	3.48 – 3.50	6.50 – 7.10

We anticipate improved activities in the NT-Bills secondary market this week, given the expected boost in liquidity levels (which stood at N71.85bn short as at Friday, 21-Jan-22) from maturing investments (OMO Bills: N110.0bn, NT-Bills: N129.3bn).

We also expect the Monetary Policy Committee (“MPC”) to hold its scheduled meeting today and tomorrow to decide monetary directions.

Thus, we advise investors to trade cautiously across the curve while taking advantage of available commercial paper offerings.
 

Please see indicative secondary market NT-Bills rates below:

Maturity	Tenor (Days)	Rate (%) p.a.	Yield (%) p.a.
31-Mar-22	66	3.75	3.78
12-May-22	108	4.40	4.46
9-Jun-22	136	5.15	5.25
14-Jul-22	171	5.83	5.99
25-Aug-22	213	6.75	7.03
9-Sep-22	228	7.05	7.37

Rates are valid till 01:45 pm today [24-Jan-22]

*Please note that the minimum subscription for NT-Bills is N100,000.00

FGN Bonds Update: Bearish Performance as Average Yield Advanced 47bps W-o-W to 11.41%

The FGN Bonds secondary market reversed its bullish sentiment last week as market participants’ focused on the PMA. The average yield in the market subsequently advanced 47bps W-o-W to close at 11.41% from 10.94% the previous week.

Specifically, activities were mixed across the curve as the average yields on short- and medium-tenured maturities dipped 46bps and 4bps W-o-W respectively to close at 7.99% and 12.40% in that order. While the average yield at the long-end of the curve surged 151bps W-o-W with the introduction of the 2042s instrument.

At the PMA last week, the Debt Management Office (“DMO”) offered a total of ₦150.0bn which was met with strong demand, recording an overall subscription of 2.2x.

 

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

	12.50% FGN JAN 2026	13.00% FGN JAN 2042
Auction Date	19-Jan-22	19-Jan-22
Settlement Date	21-Jan-22	21-Jan-22
Maturity Date	22-Jan-26	18-Apr-37
Tenors	10-Years	20-Year
Term-to-Maturity	4 Years	20 Years
Amount Offered (₦’bn)	75.00	75.00
Total Bids	112	142
Successful Bids	75	85
Subscription (₦’bn)	111.19	214.05
Amount Allotted (₦’bn)	81.72	88.92
Rang of Bids (%)	10.80 -13.25	11.00 – 14.50
Marginal Rates (%)	11.50	13.00
Allotment Ratio	1.1x	1.2x
Subscription Ratio	1.5x	2.9x

This week we expect more traction in the secondary market as investors adjust their portfolios with increasing yields in the market. In that light, we advise investors to position in attractive yields across all tenors in the market.

Please see indicative secondary market bonds rates below:

Bond	Tenor (Years)	Yield (%)	Coupon (%)	Implied Price (N)
Apr-23	2	7.50	12.75	106.15
Mar-24	3	8.20	14.20	111.52
Mar-25	4	9.35	13.53	111.19
Jan-26	5	10.45	12.50	106.56
Mar-27	6	10.90	16.29	120.76
Feb-28	7	11.20	13.98	112.00
Apr-29	8	10.60	14.55	119.60
Jul-34	9	11.30	12.15	104.09
Mar-36	14	11.85	12.40	103.53
Apr-37	16	11.95	16.25	128.97
Apr-49	28	11.80	14.80	120.94
Mar-50	29	12.15	12.98	106.51

Rates are valid till 01:45 pm today [24-Jan-22]

*Please note that the minimum subscription for FGN Bonds is N20,000,000.00