Weekly Update on NT-Bills [22.29% down 289bps] and FGN Bond [ 18.93% down 11bps]

Weekly Update on NT-Bills [22.29% down 289bps] and FGN Bond [ 18.93% down 11bps]
(Source: Afrinvest Securities Limited, Date: 29-Apr-2024)

Bullish Sentiment returns as Average Yield dips 289bps W-o-W to 22.29%

Last week, bullish sentiment returned to the Nigerian Treasury Bills ("NT-Bills") secondary market on the back of robust system liquidity, which stood at N1.27 trillion (as of Friday, April 26, 2024). Consequently, average yield dipped by 289 bps w-o-w to settle at 22.29% from 25.18% the previous week.

Buy interest was witnessed across the short, mid, and long ends as average yield fell by 185 bps, 497 bps, and 209 bps, respectively. In more detail, the instruments that witnessed the most buy interest were the 25-Jul-24 (601 bps), 22-Aug-24 (564 bps), and 5-Dec-24 (519 bps).

At the Primary Market Auction (...PMA" ) held on Wednesday, 24-APR-2024, the Apex Bank offered a total of N142.57bn across the 91-, 182-, and 364- days maturities. The offer maintained a significant level of demand as it recorded a total bid-to-cover ratio of 5.32x (₦142.57bn offer vs. ₦757.83bn subscription). Consequently, the stop rates on the 91-, 182-, and 364-day instruments closed flat.

Please see a detailed summary of the NT-Bills PMA below:

Auction Date	24-Apr-24	24-Apr-24	24-Apr-24
Allotment / Issue Date	25-Apr-24	25-Apr-24	25-Apr-24
Maturity Date	25-Jul-24	24-Oct-24	24-Apr-25
Tenor	(91-Day)	(182-Day)	(364-Day)
Offer (N)	7,846,504,000	12,954,579,000	121,767,962,000
Subscription (N)	18,703,114,000	13,484,245,000	725,644,789,000
Allotment (N)	16,482,597,000	11,991,143,000	333,978,743,000
Range of Bid Rates (%)	15.00 - 18.50	15.00 - 21.00	19.00 - 25.76
Stop Rates (%)	16.24	17.00	20.70
Previous Stop Rates (%)	16.24	17.00	20.70
Subscription Ratio	2.4x	1.0x	6.0x

This week, we expect sustained bullish momentum as the excess liquidity from the PMA is expected to flow into the secondary market as investors position themselves to fill unallotted bids. We advise 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:

Maturity	Tenor (Days)	Rate (%) p.a.	Yield (%) p.a.
27-Jun-24	59	15.65	16.05
25-Jul-24	87	14.00	14.50
22-Aug-24	115	13.85	14.45
26-Sep-24	150	14.10	14.95
24-Oct-24	178	15.25	16.45
21-Nov-24	206	16.05	17.65
20-Feb-25	297	17.40	20.30
27-Mar-25	332	17.75	21.15
10-Apr-25	346	17.80	21.40

Rates are valid till 2:00pm today (29-Apr-24)
*Please note that the minimum subscription for NT-Bills is N100,000.00

FGN Bond Update: Bullish Trajectory Sustained as Average Yield Contracts 11bps W-o-W to 18.93%
Last week, the domestic bond market witnessed a yield contraction, as market participants continued to cherry-pick instruments with attractive yields. Buy interest was witnessed across most maturities, which resulted in a decline of the average yield by 11bps w-o-w to settle at 18.93% from the 19.04% recorded in the previous week.

The average yield at the short, mid, and long ends of the curve contracted by 13bps, 12bps, and 8bps, w-o-w respectively. Specifically, the instruments that drove the decline in yield were the JAN-2026 (67bps), FEB-2034 (33bps), and JUN-2038 (76bps) instruments respectively.

Going into this week, we expect sustained bullish performance as investors continue to position in instruments with attractive yields. We therefore advise investors to take advantage of maturities with relatively attractive yields across the curve.

Please see below detailed summary of the FGN Bond PMA result:

	19.300% FGN APR 2029	18.50% FGN FEB 2031	19.00% FGN FEB 2034
Auction Date	15-Apr-24	15-Apr-24	15-Apr-24
Settlement Date	17-Apr-25	17-Apr-25	17-Apr-25
Maturity Date	17-Apr-29	11-Feb-31	21-Feb-34
Term-to-Maturity	5 Years	6 Years, 10 Months	9 Years, 10 Months
Amount Offered (₦'bn)	150	150	150
Subscription (₦'bn)	239.542	129.72	550.83
Amount Allotted (₦'bn)	79.92	85.05	461.85
Previous Stop Rates (%)	19.94	20.00	20.45
Stop Rates (%)	19.30	19.75	20.00
Subscription Ratio	3.0x	1.5x	1.2%
Allotment Ratio	0.3x	0.7x	0.8x

This week, we expect a sustained bullish performance as investors continue to take advantage of high yields at the long end of the curve on the back of a strong system liquidity which was N1.1tr long as of Friday 19-Apr-24. We therefore advice investors to take advantage of maturities with relatively attractive offers in the secondary market.

Please see below FGN bond secondary market rates:

Maturity	Tenor (Years)	Yield (%)	Coupon (%)	Implied Price (N)
Jan-26	1.8	17.20	12.50	94.58
Mar-27	2.9	17.20	16.29	89.56
Feb-28	3.8	18.20	13.98	94.80
Jul-34	10.2	17.20	12.15	84.66
Mar-36	11.9	17.20	12.40	73.55
Apr-37	13.0	17.45	16.25	74.97
Jan-42	17.8	17.00	13.00	96.11
Jun-53	29.2	17.20	15.70	76.82

Rates are valid till 2pm today (29-Apr-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:     Deborah - +234 803 522 3512
  Blessing - +234 702 547 1752
  Adebimpe - +234 913 922 0268
Mayowa-   +234 813 931 0050

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,

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Weekly Update on NT-Bills [22.29% down 289bps] and FGN Bond [ 18.93% down 11bps] (Source: Afrinvest Securities Limited, Date: 29-Apr-2024)

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Weekly Update on NT-Bills [22.29% down 289bps] and FGN Bond [ 18.93% down 11bps]
(Source: Afrinvest Securities Limited, Date: 29-Apr-2024)