Bullish turn as secondary market rate fell 2bp WoW to close at 3.42%

0

Monday, March 14, 2022 / 4:02 PM / by Afrinvest Research / Header image credit: Getty


Last week, Nigerian treasury bonds (“NT Invoices”) the secondary market continued its bull run which was supported by the increase in liquidity on Wednesday (which stood at
NOT348.8 billion long) since the buying interest was recorded on the medium term notes. Average yields have declined 2bps wow of 3.44% for
3.42%as investors picked relatively attractive maturities across the curve.


Specifically, demand was seen on medium expiries, which declined by 5bps on WoW, while short and long expiries gained 4bps and 2bps respectively, with the highest demand recorded. on the Aug 11 22 (-42bps WoW) invoice.

At last Wednesday’s primary market auction (“PMA”), the central bank’s total supply NOT94.00 billion met with strong demand, recording a subscription rate of 5.1x (total subscription: NOT482.9 billion). The 364-day instrument maintained strong demand levels with a bid-to-cover ratio of 2.1x (subscription: NOT437.8 billion). In addition, the stop rates on the long-term offer fell 25bps settle at 4.10% (from
4.35%
during the previous auction) while the rates for short and medium term offers fell by 49bps and 2bps with a bid-to-cover ratio of
1.9xeach.















Auction date

09-mar-22

09-mar-22

09-mar-22

Date of grant

10-mar-22

10-mar-22

10-mar-22

Due date

09 Jun 22

08-Sep-22

09-mar-23

Tenor

91 days

182 days

364 days

To offer (NOT)

1,550,802,000.00

11,883,004,000.00

80,570,597,000.00

Subscription (NOT)

4,404,282,000.00

40,654,628,000.00

437,839,424,000.00

Allocation (NOT)

2,323,500,000.00

21,287,627,000.00

212,920,474,000.00

Range of offers (%):

1.7500 – 6.0000

3.0000 – 7.0000

3.8450 – 6.5400

Previous stop rate (%):

2.24

3h30

4.35

Stop rate (%):

1.75

3.28

4.10

Grant rate

0.5x

0.5x

0.5x

Subscription rate

2.8x

3.4x

5.4x


This week, we expect a sustained uptrend, albeit with minimal activity, as unfilled offers at PMA are channeled into the secondary market. We also expect the open market operations (“OMO”) maturity of 58.04 billion naira to hit the market, boosting liquidity in the financial system which closed
Short of 112.9 billion naira on Friday (11 Mar 22). Thus, we maintain our advice that investors position themselves in relatively attractive instruments on the market while looking for other investment opportunities such as commercial paper.



Please see indicative secondary market NT-Bill rates below:









Maturity

Duration (days)

Net rate (%) pa

Yield (%) pa

28-Apr-22

45

3.01

3.02

26-May-22

73

3.91

3.94

30 June 22

108

4.70

4.77

14-Jul-22

122

5.12

5.21

Aug 11 22

150

5:30 p.m.

5.42

Oct 13, 22

213

5.95

6.16

Rates are valid until 1:45 p.m. today (14-Mar-22)

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

*Please note that the rates shown above are net withholding taxes (10%)

FGN Bond Update: Bullish Bias as Average Yield Decreased 17bps WoW to 10.43%

Last week, the FGN bond secondary market continued its bull run for another week on the back of buoyant liquidity in the system which stood at N348.0bnWednesday and as market players continue to position themselves on relatively attractive offers across the curve.

The average return over all durations decreased by WoW 17bps settle at 10.43%from 10.61% the previous week, with medium-term maturities being the most in demand. Particularly, the 27-Jan-22,
23-Jul-30,and 27-mar-35maturities saw the most buying interest, down 154bps,
45bps,and 33bpsWoW respectively.


This week, we expect secondary market activity to improve as investors adjust their portfolios and look to invest coupon payments worth N719.9bninto relatively attractive offers on the market. Thus, we advise investors to position themselves on maturities in all market segments.



Please see indicative secondary market bond rates below:













Maturity

Tenor (Years)

Yield (%)

Coupon (%)

Implicit price (N)

Apr-23

2

6.60

12.75

106.53

March 24

3

6.80

2:20 p.m.

113.62

March 25

4

9:30 a.m.

13.53

110.94

Jan-26

5

9:40 a.m.

12.50

109.82

March 27

6

9:45 a.m.

16.29

126.81

February 28

7

9:40 a.m.

13.98

120.50

Jul-34

13

11.00

12:15 p.m.

107.63

March-36

15

11.08

12:40 p.m.

109.28

Apr-37

16

11:25 a.m.

4:25 p.m.

135.89

Apr-49

28

11.90

14.80

123.27

Rates are valid until 1:45 p.m. today (14-Mar-22)

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

*Please note that withholding tax (10%) is now applicable.

Proshare Nigeria Pvt.  ltd.

Related News

1.
Invest in the Monthly FGN Bond Auction – March 2022

2.
NCM 2021: Nigeria has no plans to enter Eurobond market in 2022

3.
NCM 2021: money market turnover represents 26.44% of the FIC market in 2021

4.
GCR withdraws issuer ratings from TAK Logistics following redemption and cancellation of bonds

5.
Fixed income funds and their potential for healthy investment portfolios

6.
NCM 2021: Important global themes dominated the fixed income market

7.
Airtel Africa Confirms Completion of Repayment of its 5.125% Senior Secured Notes of Approximately $505 Million

8.
March 2022 FGN Savings Bond Subscription Offering

9.
Average yield fell 36 basis points on WoW to 3.41% as liquidity levels improved

ten. Ardova lists N11.44 billion 7-year and N13.86 billion 10-year bonds under the N60 billion bond issuance program

Share.

Comments are closed.