August 14, 2023/Afrinvest Research

The Nigerian Treasury Bills (“NT-Bills”) secondary market started the previous week on a quiet note as investors anticipated the result of the Primary Market Auction (’’PMA’’) that was held on Wednesday (9 -Aug-23). Mild selloffs were witnessed on selected papers after the NT-bills auction. Consequently, average yield rose 37bps W-o-W to settle at 7.33% from 6.96% the previous week. 

Selloffs were witnessed on the short- and long-term instruments as their average yields expanded 29bps and 24bps W-o-W respectively. Specifically, the 26-Oct-23 expanded the most as its average yield advanced 178bps. W-o-W.

At the PMA held on Wednesday 09-Aug-23, the Apex bank offered a total of N153.98bn 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 5.43x (N153.98bn offer vs. ₦836.29bn subscription). Furthermore, stop rates on the 91-, 182- and 364-Day maturities declined 100bps, 210bps and 235bps to 5.00, 6.90 and 9.80 respectively.

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

Also, the Apex bank resumed Open Market Operation (OMO) with a total offer worth N150.0bn across the 96-,187-, and 362-day instruments. The 362- day notes recorded the most demand with a bid-to cover ratio of 2.4x. The187-day and 96- day instruments: were oversubscribed with bid-to-cover ratio of 1.7x and 1.6x, respectively.

This week, we anticipate sustained bearish sentiments as system liquidity (which stood at N63.09bn short as of Friday 11-Aug-23) will further be depressed by the absence of inflows from NT-Bills maturities and FGN bond coupon payments. Thus, 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:

Rates are valid till 01:45pm today (14-Aug-23)

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

FGN Bond Update: Average Yield Expands 21bps W-o-W to 13.52%

Activities in the domestic bond market remained bearish as investors continue to weigh inflation and interest rate hikes into asset pricing. Consequently, average yield improved by 21bps W-o-W to settle at 13.52% from 13.31% the previous week.

Specifically, most selloffs were witnessed on the MAR-2025, FEB-2028 and JAN-2042 maturities as their average yields expanded 107bps, 55bps and 47bps respectively.

Today, Monday 14-Aug-23, at the PMA the Debt Management office (“DMO”) will be offering a total of N360.00bn across the APR-2029, JUN-2033, JUN-2038, and JUN-2053 maturities.

Please see below our PMA expectations:

We expect quiet trading sessions at the beginning of the week as investors shift focus to the bond auction. We therefore advise investors to take advantage of maturities with relatively attractive yields across the curve, particularly at the shorter and longer ends of the curve.
  

Please see below FGN bond secondary market rates: 

 
Rates are valid till 01:45pm today (14-Aug-23) 

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