Average Yields on T-Bills Close at 14.9% on Sustained Sell-offs – Afrinvest

Last week, the Treasury Bills (“ T-Bills ”) market started off on a bearish note, sustaining its performance in the previous week as investors continued to exit positions at the shorter-end of the curve – particularly the 28-Feb-19 (+134bps) and 04-Apr-19 (+298bps) bills – due to the liquidity squeeze within the system. As a result, average yields across tenors advanced 24bps W-o-W to settle at 14.9% from 14.6% recorded in the previous week.

At the Primary Market Auction (“PMA”) that held mid-week, the Central Bank offered a total of N153.4bn across the 91-, 182- and 364-day tenors. The offer witnessed a bid-to-cover ratio of 2.9x, signifying high demand by investors (N285.2bn oversubscribed). Please see results below:

Auction Date 13-Feb-19 13-Feb-19 13-Feb-19
Allotment / Issue Date 14-Feb-19 14-Feb-19 14-Feb-19
Tenor (91-Day) (182-Day) (364-Day)
Offer (N) 3,384,180,000 10,000,000,000 140,000,000,000
Subscription (N) 11,577,947,000 22,114,754,000 404,892,985,000
Allotment (N) 3,384,180,000 10,000,000,000 140,000,000,000
Range of Bid Rates (%): 10.8000 – 12.5000 12.0000 – 13.5000 14.8000 – 16.5237
Stop Rates (%): 10.9700 13.40 14.95
Previous Stop Rates (%): 11.0000 13.50 15.00
Bid-to-cover Ratio: 3.4x 2.2x 2.9x
Allotment Ratio: 0.3x 0.5x 0.4x
The Apex bank conducted OMO auctions on three trading sessions last week, the first holding on Monday where a total of N25.0bn was offered across the 94-day, 178-day and 360-day tenors with a bid-to-cover ratio of 1.5x while Tuesday’s auction announcement – with a total offer of N65.0bn – recorded an unexpected no-sale. However, Thursday’s offer was met with moderate demand as the total offer of N650.0bn witnessed a bid-to-cover ratio of 0.8x.

Going into the week, on the back of the tight liquidity (N173.8bn short as at Friday), we expect that the sell-offs may persist amidst sustained OMO interventions by the Apex bank as N700.0bn worth of OMO maturities are scheduled to hit the system. Thus, we advise investors to take advantage of the generally more attractive rates at the OMO auctions.

Please see indicative T-Bills rates below:

Maturity Tenor (Days) Rate (%) p.a. Yield (%) p.a.
07-Mar-19 17 7.00 7.02
21-Mar-19 31 9.50 9.58
18-Apr-19 59 9.50 9.65
02-May-19 73 9.50 9.68
16-May-19 87 10.00 10.24
15-Aug-19 178 12.50 13.31
17-Oct-19 241 13.80 15.18
09-Jan-20 325 14.01 16.01
OMO Auction c.100 10.70 11.03
OMO Auction c.200 12.50 13.55
OMO Auction c.350 14.20 16.45

Rates are valid till 01:45pm today (18-Feb-2019)
*Please note that the minimum subscription for T-Bills is N100,000.00

Kindly fund your Afrinvest in-house account “instantly” right from your online banking platform through NIBBS E-Bills (Read FAQs). The banks currently enabled are Guaranty Trust Bank, Ecobank, First Bank, Diamond Bank, Stanbic IBTC, Wema Bank and Zenith Bank

For GT Bank users, please note that you can fund your account using the USSD code below:
*737* 35 *Amount* 9054 # (for example *737* 35 *1000000* 9054#)
NOTE: Payment should ONLY be made to Afrinvest Securities Limited Client bank accounts

FGN Bonds Market Update: Bearish Performance on the back of Sell-offs

In the bonds market, there was a reversal of the bullish note recorded in the previous week as investors sold off positions at the shorter-end of the curve. Consequently, average yield across tenors inched northwards by 23bps W-o-W to 15.1% as major sell-offs were witnessed on the 22-Mar-19 (+1.1%) and 13-Feb-2020 (+1.1%) maturities.

This week, we expect to see a furtherance of this bearish trend as investor sell-offs may persist in line with the overall wariness stemming from the current political climate. Therefore, we advise investors to trade cautiously and take advantage of maturities with attractive yields.

Please see indicative FGN bond rates below:

Bond Tenor (Years) Yield (%) Coupon (%) Implied Price (N)
Jul-21 2 14.50 14.50 99.96
Jan-22 3 14.20 16.39 105.09
Mar-24 5 14.35 14.20 99.44
Jan-26 7 14.40 12.50 91.81
Mar-27 8 14.58 16.29 107.93
Feb-28 9 14.69 13.98 92.03
Jul-34 15 14.10 12.15 87.83
Mar-36 17 14.30 12.40 87.94
Apr-37 18 14.10 16.25 113.90

Rates are valid till 01:45pm today (18-Feb-2019)
*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

– AFRINVEST

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