Weekly Update on NT-Bills [18.11% down 111bps] and FGN Bond [ 19.27% up 83bps]

Weekly Update on NT-Bills [18.11% down 111bps] and FGN Bond [ 19.27% up 83bps]
(Source: Afrinvest Securities Limited, Date: 25-Mar-2024)

Bullish Streak Continues as Average Yield Declines 111bps W-o-W to 18.11%

Last week, the Nigerian Treasury Bills ("NT-Bills") secondary market witnessed a bullish momentum, with demands seen across the curve, fueled by moderate system liquidity, which stood at N97.44bn as of Wednesday, 20-Mar-24. Consequently, the average yield declined by 111bps, closing at 18.11%, down from the previous week's 19.22%.
Specifically, the February and March bills garnered the most attention, with trades occurring on the 6th and 20th of Feb 2025 bills, at rates of 18.65% and 18.55%, respectively. Additionally, there were offers on the 5th Sep bill at 16.40% levels, although there were few bids to match.
This Wednesday 27-Mar-24, the Apex bank is scheduled to roll over a total of ₦161.33bn through the NT-bill Primary Market Auction (...PMA" ) across the 91-, 182- and 364-Day instruments.

Please see below our expectation of the NT-Bills PMA:

Auction Date	27-Mar-24	27-Mar-24	27-Mar-24
Allotment / Issue Date	28-Mar-24	28-Mar-24	28-Mar-24
Tenor	91-Day	182-Day	364-Day
Offer Amount (₦)	17,606,519,000	1,560,401,000	142,162,229,000
Previous Stop rates (%)	16.2399	17.00	21.1240
Expected stop Rate Range (%)	15% - 17%	16.00% - 17.00%	19% - 20.75%

This week, we expect the decision from the MPC meeting to dictate market sentiment. Thus, we advise investors to look out for relatively attractive bills across the curve, as well, as possible commercial paper offerings.

Please see indicative secondary market NT-Bills rates below:

Maturity	Tenor (Days)	Net Rate (%) p.a.	Yield (%) p.a.
23-May-24	59	11.05	11.25
27-Jun-24	94	11.75	12.10
25-Jul-24	122	12.40	12.90
22-Aug-24	150	13.25	14.00
26-Sep-24	185	13.85	14.90
21-Nov-24	241	14.90	16.50
12-Dec-24	262	15.35	17.25
23-Jan-25	304	16.10	18.55
20-Feb-25	332	16.90	19.95

Rates are valid till 02:30pm today (25-Mar-24)
*Please note that the minimum subscription for NT-Bills is N100,000.00

FGN Bond Update: Bearish Momentum Persist as Average Yield advanced 83bps W-o-W to 19.27%

In the FGN bond secondary market, a bearish trend prevailed as market participants adjusted their positions ahead of the MPC meeting slated for this week. Additionally, investors' response to the new FX-related bond issuances influenced market dynamics. Consequently, the average yield surged by 83bps W-o-W, closing at 19.27% up from the previous week's 18.44%.
In more detail, selloffs were witnessed across all the curve, majorly at the short- and Mid - end, as average yield increased by 140bps and 62bps respectively. Specifically, the JAN-2026 and APR-2032 instrument witnessed the most selling interest, as their yield rose 229bps and 244bps respectively.
At the PMA held on, Monday, 18-Mar-24, the Debt Management Office (...DMO" ) offered a total of ₦450bn across the MAR-2027 (new issue), FEB-2031 and FEB-2034 bonds. The auction came oversubscribed with bid to offer ratio at 1.37x as investors showcased their bearish bias causing stop rates on the maturities to close at 19.94%, 20.00% and 20.45%.

Please see below the detailed summary of the FGN Bond PMA Results

	19.94% FGN MAR 2027	18.50% FGN FEB 2031	19% FGN FEB 2034
Tenor	3-Year	7-Year	10-Year
Amount Offered (N)	150,000,000,000.00	150,000,000,000.00	150,000,000,000.00
Total Subscription (N)	264,630,000,000.00	51,790,000,000.00	298,600,000,000.00
Amount Allotted: (N)	151,930,000,000.00	47,890,000,000.00	275,850,000,000.00
Stop Rates (%)	19.94	20.00	20.45
Subscription Ratio	1.76	0.35	1.99
Allotment Ratio	0.57	0.92	0.92
bidtocover ratio	1.74	1.08	1.08

This week, we anticipate the continuation of the bearish sentiment, driven by expectations of additional MPR rate hikes in the upcoming MPC meeting scheduled for Tuesday, March 26th. Hence, we advise investors to take advantage of maturities with relatively attractive offers in the secondary market particularly at the short end of the curve.

Please see below FGN bond secondary market rates:

Maturity	Tenor (Years)	Yield (%)	Coupon (%)	Implied Price (N)
Jan-26	1.8	15.80	12.50	96.43
Mar-27	3.0	16.95	16.29	89.87
Feb-28	3.9	16.90	13.98	98.26
Jul-34	10.3	16.05	12.15	89.66
Mar-36	12.0	16.10	12.40	78.20
Apr-37	13.1	16.60	16.25	78.43
Jan-42	17.9	16.00	13.00	101.31
Jun-53	29.3	17.55	15.70	75.30

Rates are valid till 02:30pm today (25-Mar-24)
*Please note that the minimum subscription for FGN Bond is N20,000,000.00

To indicate your interest and for further enquiries, kindly send an email to brokerageteam@afrinvest.com or call the below contacts:

Lagos:      Victoria - +234 810 982 6693
   Adebimpe - +234 913 922 0268
Margaret - +234 806 407 1983
Deborah - +234 803 522 3512

Port Harcourt:   Taiwo   - +234 808 718 4771
   Uduak   - +234 809 023 4238
Mishael -   +234 806 613 1311

Abuja: Bolanle - +234 909 504 1827
Favour - + 234 701 471 6268

Onitsha:   Paul - +234 803 707 1720
   Haniel - +234 814 845 9513
Imuetinyan - +234 814 226 6258

Thank you for choosing Afrinvest Securities Limited.

Best regards,

Weekly Update on NT-Bills [18.11% down 111bps] and FGN Bond [ 19.27% up 83bps] | InfoWARE Finance

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Weekly Update on NT-Bills [18.11% down 111bps] and FGN Bond [ 19.27% up 83bps] (Source: Afrinvest Securities Limited, Date: 25-Mar-2024)

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Weekly Update on NT-Bills [18.11% down 111bps] and FGN Bond [ 19.27% up 83bps]
(Source: Afrinvest Securities Limited, Date: 25-Mar-2024)