Bearish Sentiment Hold Sway as Average Yield Increase 5bps W-o-W to 7.98%
Last week, the Nigerian Treasury Bills (...NT-Bills" ) secondary market maintained a bearish trajectory as average yield advanced 5bps W-o-W to settle at 7.98% from 7.93% recorded in the previous week. The bearish performance was occasioned by liquidity crunch exacerbated by the Primary Market Auction (...PMA" ).
Sell-offs were witnessed at the mid and long ends of the curve as average yield expanded 6bps respectively evident in the 22-Feb-24, 22-Jul-24 and 8-Aug-24 bills as their yields advanced by 35bps, 57bps and 28bps respectively plunging the market into a bearish close.At the PMA held on Wednesday 13-Sep-23, the Apex bank offered a total of N152.20bn 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 4.23x (₦152.2bn offer vs. ₦643.9bn subscription). Consequently, the stop rates on 91- and 364-Day instruments rose to close at 6.50% and 12.98%respectively while the 182-day instrument closed flat.
Please see below our PMA expectations:
| Auction Date |
13-Sep-23 |
13-Sep-23 |
13-Sep-23 |
| Allotment / Issue Date |
14-Sep-23 |
14-Sep-23 |
14-Sep-23 |
| Maturity Date |
14-Dec-23 |
14-Mar-24 |
12-Sep-24 |
| Tenor |
(91-Day) |
(182-Day) |
(364-Day) |
Offer (₦) |
1,101,072,000 |
918,383,000 |
150,180,915,000 |
Subscription (₦) |
1,274,076,000 |
3,931,874,000 |
638,670,843,000 |
Allotment (₦) |
1,101,072,000 |
918,383,000 |
150,180,915,000 |
| Range of Bid Rates (%): |
4.00-6.50 |
7.00-8.00 |
5.00-17.05 |
| Stop Rates (%): |
6.50 |
7.00 |
12.98 |
| Previous Stop Rates (%): |
4.50 |
7.00 |
12.55 |
| Subscription Ratio: |
1.2x |
4.3x |
4.3x |
This week, we expect some bullish momentum in the market on the back of inflows from coupon payments which will further boost system liquidity. 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) |
Net Rate (%) p.a. |
Yield (%) p.a. |
| 7-Dec-23 |
80 |
1.55 |
1.56 |
| 8-Feb-24 |
143 |
4.20 |
4.27 |
| 14-Mar-24 |
178 |
5.00 |
5.12 |
| 25-Apr-24 |
220 |
6.15 |
6.39 |
| 23-May-24 |
224 |
6.95 |
7.29 |
| 6-Jun-24 |
262 |
8.00 |
8.49 |
| 25-Jul-24 |
311 |
9.00 |
9.49 |
| 22-Aug-24 |
339 |
9.50 |
10.42 | Rates are valid till 01:45pm today (18-Sep-23)
*Please note that the minimum subscription for NT-Bills is N100, 000.00
FGN Bond Update: Average Yield Advance 24bps W-o-W to 14.40%
Bearish spree continued in the domestic bond market as sell pressure from the previous week lingered as the bond auction which held on Monday, 11-Sep-23 took the center stage. The low demand witnessed at the auction and uptick in inflation weakened market sentiment which drove average FGN Bond yield up by 24bps W-o-W to 14.40% from 14.16% that was recorded in the prior week.
Sell pressure was witnessed across all maturities except the MAR-2024 and FEB-2028 which declined 63bps and closed flattish respectively. Relatively substantial increases in the yields on MAR-2025, MAR-2027 and MAR-2050 instruments which rose 152bps, 59bps and 47bps respectively drove the market to a bearish close.
At the PMA the Debt Management office (...DMO" ) offered a total of N360.00bn across the APR-2029, JUN-2033, JUN-2038, and JUN-2053 maturities. The auction witnessed depressed demand as all maturities on offer were undersubscribed except the JUN-2053 instrument. Consequently, the Subscription Ratio closed at 0.81x (₦360.0bn offer vs. ₦290.9bn subscription) while the stop rates closed at 14.50%, 15.45%, 15.55% and 16.25% for the APR-2029, JUN-2033, JUN-2038, and JUN-
2053 maturities respectively.
| Tenor |
14.55% FGN APR 2029 |
14.70% FGN JUN 2033 |
15.45% FGN JUN 2038 |
15.70% FGN JUN 2053 |
| 10-Year (Re-opening) |
10-Year (Re-opening) |
15-Year (Re-opening) |
30-Year (Re-opening) |
| Term to maturity |
5 Years, 8 Months |
9 Years, 9 Months |
14 Years, 9 Months |
29 Years, 9 Month |
Amount Offered (₦) |
90,000,000,000.00 |
90,000,000,000.00 |
90,000,000,000.00 |
90,000,000,000.00 |
Total Subscription (₦) |
44,545,000,000.00 |
10,946,000,000.00 |
29,688,000,000.00 |
205,814,000,000.00 |
Amount Allotted: (₦) |
43,645,000,000.00 |
10,446,000,000.00 |
25,688,000,000.00 |
171,714,000,000.00 |
| Range of Bid Rates (%) |
13.75 - 15.00 |
14.00 - 15.80 |
14.50 - 16.00 |
15.00 - 17.00 |
| Stop Rates (%) |
14.50 |
15.45 |
15.55 |
16.25 |
| Subscription Ratio: |
0.49x |
0.12x |
0.33x |
2.29x |
| Allotment Ratio |
0.98x |
0.95x |
0.87x |
0.83x | Going into the week, we expect bullish sentiment driven by improved liquidity from coupon payment worth
₦134.7bn which will be paid Today, 18-Sep-23 to support a positive close. We therefore advise investors to take advantage of maturities with relatively attractive yields across the curve.
Please see below FGN bond secondary market rates:
| Maturity |
Tenor (Years) |
Yield (%) |
Coupon (%) |
Implied Price (N) |
| Mar-24 |
0.5 |
8.30 |
14.20 |
102.77 |
| Mar-25 |
1.5 |
10.50 |
13.50 |
104.13 |
| Jan-26 |
2.3 |
12.50 |
12.50 |
99.96 |
| Mar-27 |
3.5 |
12.40 |
16.25 |
110.77 |
| Feb-28 |
4.4 |
13.20 |
13.95 |
102.53 |
| Jul-34 |
10.8 |
13.70 |
12.10 |
91.33 |
| Mar-36 |
12.5 |
13.95 |
12.40 |
90.95 |
| Apr-37 |
13.6 |
14.60 |
16.25 |
109.59 |
| Jan-42 |
18.3 |
14.55 |
13.00 |
101.63 | | Rates are valid till 01:45pm today (18-Sep-23)
*Please note that the minimum subscription for FGN Bond is N20, 000,000.00
To invest in FGN bond, NT-Bills, commercial papers, or other fixed-income securities, please send an email to brokerageteam@afrinvest.com or contact the persons below:
Lagos: Victoria - +234 810 982 6693
Adebimpe - +234 913 922 0268
Blessing - +234 813 124 1014
Mayowa - +234 916 841 3719
Margaret - +234 806 407 1983
Deborah - +234 803 522 3512
Port Harcourt: Uduak - +234 809 023 4238
Mishael - +234 806 613 1311
Onitsha: Paul - +234 803 707 1720
Abuja: Bolanle - +234 909 504 1827
Thank you for choosing Afrinvest Securities Limited.
Best regards,
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