Average T-Bills Yield Rises to 12.9% W-o-W on CBN OMO Auctions – AFRINVEST
The Apex bank conducted Open Market Operations (“OMO”) auctions on 2 out of the 3-Day trading sessions last week. This was to mop up excess liquidity from the previous week (N413.2bn positive as at 31-May-19) as well as OMO maturities (N177.1bn) that hit the system after the holidays. Consequently, the Treasury Bills (“T-Bills”) secondary market activity was bearish all through the week advancing 70bps W-o-W to close at 12.9% from 12.2% the previous week as the short-, medium- and long-term bills improved 50bps, 81bps, and 69bps respectively.
At the first OMO auction, N200.0bn was offered across the short-long tenors with 75.0% (N150.0bn) of the offer on the long-term bill which as expected, was 2.1x oversubscribed while the short and medium-term bills were 0.2x and 0.9x undersubscribed respectively due to similar maturities with more attractive rates in the secondary market. The CBN was therefore, able to sell N317.9bn on Monday.
On Thursday, the CBN was however able to mop up only 0.9x of the N170.0bn offered at the OMO auction with most interest (N120.0bn) in the long 364-Day bill which was 1.3x oversubscribed while the short- and medium-term bills received inconsequential attention hence, only N158.0bn was sold by the CBN.
Please see indicative T-Bills rates below:
| Maturity | Tenor (Days) | Rate (%) p.a. | Yield (%) p.a. |
| 5-Sep-19 | 87 | 9.50 | 9.72 |
| 3-Oct-19 | 115 | 10.80 | 11.18 |
| 31-Oct-19 | 143 | 11.10 | 11.60 |
| 5-Dec-19 | 178 | 11.00 | 11.62 |
| 16-Jan-20 | 220 | 11.60 | 12.47 |
| 20-Feb-20 | 255 | 11.60 | 12.62 |
| 28-May-20 | 353 | 11.70 | 13.19 |
| OMO Auction | c.100 | 10.00 | 10.28 |
| OMO Auction | c.200 | 11.00 | 11.71 |
| OMO Auction | c.350 | 11.70 | 13.18 |
*Please note that the minimum subscription for T-Bills is
We believe the positive liquidity levels (N425.6bn long as at 07-Jun-19) would drive demand this week but still expect investors to remain cautious ahead of the release of the new Primary Market Auction (“PMA”) 3rd quarter calendar. Additionally, with N129.6bn worth of maturing PMA, we anticipate more OMO mop up actions by the CBN. Investors are advised to position more in the long OMO maturities with yields c. 13.5%.
Please see primary market commercial paper (“CP”) rates for today below:
| Type | Series No. | Maturity Date | Tenor (Days) | Rate (%) | Yield (%) | Offer Close Date |
| Dangote Cement Plc | Series 8 | 12-Sep-19 | 90 | 10.2445 | 10.5100 | 13-Jun-19 |
| Dangote Cement Plc | Series 9 | 11-Dec-19 | 180 | 12.5254 | 13.3500 | 13-Jun-19 |
| Dangote Cement Plc | Series 10 | 10-Mar-20 | 270 | 12.6862 | 14.0000 | 13-Jun-19 |
Please note that rates are valid till 09:00am (13-Jun-19)
*Please note that the minimum subscription for CP is N5,000,000.00
FGN Bond Market Update: Bullish Run Reversed as Average Yield Edges 72bps W-o-W
The bullish run in the FGN bonds market was reversed, mirroring T-Bills performance as average yield across all instruments closed at 14.0% from 13.3% the previous week improving 72bps W-o-W majorly on the back of weak investor appetite.
The short-term bonds advanced the most by 87bps W-o-W due to low demand as seen in the secondary T-Bills market.
| Bond | Tenor (Years) | Yield (%) | Coupon (%) | Implied Price (N) |
| Jul-21 | 2 | 14.10 | 14.50 | 100.67 |
| Jan-22 | 3 | 14.10 | 16.39 | 104.84 |
| Apr-23 | 4 | 14.20 | 12.75 | 95.75 |
| Mar-24 | 5 | 14.12 | 14.20 | 100.21 |
| Mar-25 | 6 | 14.20 | 13.53 | 97.36 |
| Jan-26 | 7 | 14.25 | 12.50 | 92.62 |
| Mar-27 | 8 | 14.33 | 16.29 | 108.93 |
| Feb-28 | 9 | 14.50 | 13.98 | 97.41 |
| Jul-34 | 15 | 14.45 | 12.15 | 85.98 |
| Mar-36 | 17 | 14.51 | 12.40 | 86.79 |
| Apr-37 | 18 | 14.45 | 16.25 | 111.37 |
Rates are valid till 01:45pm today (10-Jun-19)
Going into the week, we expect the market to be driven by local investors’ bargain hunting as yield on benchmark bonds especially short-term Jul-2021 (+0.7%) improved.
To invest in FGN Bonds or T-Bills, send an email to – [email protected]
