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Weekly Update on NT-Bills [21.92% down 12bps] and FGN Bond [ 18.60% up 4bps]
(Source: Afrinvest Securities Limited, Date: 10-Jun-2024)
Bullish Trend Continues as Average Yield Dips 12bps W-o-W to 21.92%

The Nigerian Treasury Bills ("NT-Bills") market had a mixed performance last week, starting bullish with declining yields across most maturities. Post-auction, bearish sentiment on the 1-year bill was offset by strong mid-tenor demands, despite low liquidity (which stood at N29.66bn long as of Thursday, 6-Jun-24). Consequently, the average benchmark yield fell by 12bps w-o-w to settle at 21.92%.

Buying interest was primarily focused on the short end of the curve, particularly the 24-OCT-24 bill, which saw a substantial drop of 159bps. Conversely, on the long end, the 06-FEB-25 and 06-MAR-25 bills experienced w-o-w yield increases of 35bps and 37bps, closing at 23.92% and 25.18%, respectively.

Last Wednesday, 05-Jun-24, the DMO offered ₦221.12bn across three tenors, total subscription amounted to ₦713.89 billion with only allotted value of ₦278.42 billion. Stop rates closed at previous auction levels of 16.50%, 17.50%, and 20.67% on the 91-, 182-, and 364-day papers.

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

 
Auction Date 05-Jun-24 05-Jun-24 05-Jun-24
Allotment / Issue Date 06-Jun-24 06-Jun-24 06-Jun-24
Maturity Date 05-Sep-24 05-Dec-24 05-Jun-25
Tenor (91-Day) (182-Day) (364-Day)
Offer () 14,417,910,000 26,817,406,000 179,890,081,000
Subscription () 21,442,788,000 15,024,359,000 677,422,133,000
Allotment () 19,605,970,000 12,274,358,000 246,545,069,000
Range of Bid Rates (%) 15.25 - 18.00 16.50 - 25.00 16.40 - 25.00
Stop Rates (%) 16.50 17.50 20.67
Previous Stop Rates (%) 16.24 17.00 20.70
 
On Thursday, 13-Jun-24, the Apex bank is scheduled to offer bills worth ₦44.22bn across the 91-, 182- and 364-Day instruments in the Primary Market Auction (...PMA" ).

Please see below our NT-Bills PMA expectations:

 
Auction Date 13-Jun-24 13-Jun-24 13-Jun-24
Allotment Date 13-Jun-24 13-Jun-24 13-Jun-24
Tenor 91-Day 182-Day 364-Day
Offer Amount () 5,728,170,000 6,345,471,000 32,154,897,000
Last Stop Rate (%) 16.50 17.50 20.67
Expected Stop Rate Range (%) 16.00 - 16.50 17.00 - 17.50 20.50 - 21.00

This week, we expect the outcome from the PMA to dictate the direction of the market. 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) Rate (%) p.a. Yield (%) p.a.
25-Jul-24 45 14.45 14.70
22-Aug-24 73 14.75 15.20
26-Sep-24 108 14.95 15.65
24-Oct-24 136 15.80 16.80
21-Nov-24 164 16.30 17.60
20-Feb-25 255 17.50 19.95
27-Mar-25 290 17.65 20.55
10-Apr-25 304 17.75 20.85
8-May-25 332 17.75 21.20
Rates are valid till 2:00pm today (10-Jun-24)
*Please note that the minimum subscription for NT-Bills is N100,000.00

FGN Bond Update: Bearish Momentum Holds as Average Yield Expands 4bps W-o-W to 18.60%

Conversely, the FGN secondary bond market maintained a downward trend, with significant selling pressure at the mid-segment of the curve driving the average yield up by 4bps w-o-w to 18.60%, from the previous week's 18.56%.

In more detail, we witnessed selloffs at the short and mid segments of the curve, notably on the MAR-2025, FEB-2031, and JUN-2033 bonds, which declined by 6bps, 33bps, and 4bps, respectively. On the other hand, positive buying interests were sustained at the long end, particularly in the 2049s, 2050s, and 2053s bonds, where the average yield decreased by 12bps w-o-w.

This week, the bearish sentiment is expected to persist, barring any positive news that could potentially drive a positive performance in the market. 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  1.6  17.00  12.50  95.16
 Mar-27  2.8  17.30  16.29  89.67
 Feb-28  3.7  18.30  13.98  94.65
 May-33  8.9  19.18  19.89  92.02
 Jul-34  10.1  16.60  12.15  87.30
 Mar-36  11.8  17.30  12.40  73.16
 Apr-37  12.9  16.95  16.25  77.04
 Jan-42  17.6  16.70  13.00  97.59
 Jun-53  29.1  16.55  15.70  79.80
 Rates are valid till 2:00pm today (10-Jun-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 any of the contacts below:
            
 Lagos:            Blessing  -   +234 702 547 1752
                       Adebimpe   +234 913 922 0268
                       Mayowa-    +234 813 931 0050
                       Victoria -    +234 810 982 6693  
                       Margaret-   +234 806 407 1983

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

                           Imuetinyan  -  +234 814 226 6258 
                 

 Kano:                 Moses -      +234 803 589 9665
                            Helen -       +234 813 669 6980

Thank you for choosing Afrinvest Securities Limited.
 
Best regards,
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