Average T-Bills Yield Contracts Marginally to 13.4% as CBN Resumes OMO Auctions; T-Bills and FGN Bonds Indicative Rate

The Treasury Bills (“ T-Bills ”) secondary market started the second quarter of 2019 on a bullish note largely buoyed by increased system liquidity from FAAC injection on the Friday of the previous week. However, the Central Bank of Nigeria (“CBN”) resumed its aggressive liquidity mop-ups through OMO auctions after a surprise one-week break. Notwithstanding, average yields across all tenors shed marginally by 2bps W-o-W to settle at 13.4% from 13.6% the previous week.

Demand was witnessed largely on the short- and medium-term bills causing yields to tank by 60bps and 20bps W-o-W respectively while the long-term bills advanced 11bps W-o-W as sell-offs were experienced on the 02-JAN-20 (+0.4%) and 23-JAN-20 (+0.2%) bills.

Last week, the Apex bank also offered a total of N350.0bn in two OMO auctions. At the first auction on Tuesday, N200.0bn was offered across the 86-,153- and 364-Day bills while on Thursday, N150.0bn was offered across the 203- and 364-Day bills. Investors exhibited preference for longer tenor OMO instruments which recorded (2.1x) over-subscription while the short and medium term were under subscribed by (0.6x) and (0.1x) respectively.

In addition, the CBN offered N95.7bn worth of bills across 91-, 182- and 364-Day tenors  at the Primary Market Auction (“PMA”) on Wednesday with a total bid-to-cover ratio of 2.1x and stop rates inching 40bps and 51bps on medium- and long-term bills in tandem with the secondary market levels. Also, the bills were all oversubscribed, however, only the long-term bill was fully allotted while the 91-Day and 182-Day bills received 0.5x and 0.8x allotment, respectively.

Please see a detailed summary in the table below:

Auction Date 3-Apr-19 3-Apr-19 3-Apr-19
Allotment / Issue Date 3-Apr-19 3-Apr-19 3-Apr-19
Tenor 91-Day 182-Day 364-Day
Offer Amount (N) 10,000,000,000 17,600,581,000 68,080,464,000
Total Subscription (N) 20,093,319,000 22,965,789,000 153,996,664,000
Allotment (N) 10,000,000,000 17,600,581,000 153,996,664,000
Range of Bid Rates (%) 10.0000-13.0000 11.8000-14.0000 11.7999-15.0000
Stop Rates (%) 10.29 12.60 12.85
Previous Stop Rates (%) 10.30 12.20 12.345
Bid-to-Cover Ratio 2.0x 1.3x 2.3x
Allotment Ratio 0.5x 0.8x 1.0x
Going into the week, we expect yields to remain high on the back of tightened liquidity and possibility of CBN mop-up exercise as OMO maturities worth N33.0bn is expected to hit the system. Thus, investors are advised to take advantage of medium to long term bills with attractive yields.Please see indicative T-Bills rates below:

Maturity Tenor (Days) Rate (%) p.a. Yield (%) p.a.
30-May-19 52 9.50 9.63
06-Jun-19 59 10.00 10.16
18-Jul-19 101 9.50 9.76
01-Aug-19 115 10.40 10.75
15-Aug-19 129 11.00 11.44
29-Aug-19 143 11.70 12.26
03-Oct-19 178 12.40 13.20
14-Nov-19 220 12.40 13.40
19-Dec-19 255 12.45 13.64
30-Jan-20 297 12.30 13.67
20-Feb-20 318 12.30 13.78

Rates are valid till 01:45pm today (08-Apr-19)
*Please note that the minimum subscription for T-Bills is N100,000.00


FGN Bonds Market Update: The Bears take the Market as Average Yield Advances 14bps W-o-W

Performance in the bond market was bearish as average yield advanced 14bps W-o-W to settle at 14.1% last week due to sell-offs experienced across all segments of the curve. However, it intensified in JAN-22, FEB-28 and NOV-28 maturities whose yields advanced by 38bps, 38bps and 37bps respectively.

Also, the Debt Management Office (“DMO“) released the FGN Bonds issuance calendar for the second quarter of 2019 where it announced to issue its first 30-year bond.

We anticipate quiet trading sessions in the bond market this week as investors trade cautiously, awaiting clear policy directions.

Please see below indicative FGN Bond rates:

Bond Tenor Yield (%) Coupon Rate (%) Implied Price
Jul-21 2 14.20 14.5000 100.50
Jan-22 3 14.00 16.3900 105.33
Apr-23 4 14.20 12.7500 95.62
Mar-24 6 14.15 14.2000 100.14
Mar-25 8 14.23 13.5300 97.23
Jan-26 9 14.25 12.5000 92.49
Mar-27 10 14.35 16.2884 108.98
Feb-28 16 14.56 13.9800 97.12
Jul-34 18 14.30 12.1493 86.73
Mar-36 19 14.37 12.4000 87.58
Apr-37 19 14.22 16.2499 113.06









Rates are valid till 01:45pm today (08-Apr-19)

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

To invest in FGN Bonds or T-Bills, send an email to – brokerageteam@afrinvest.com



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