Average NT-Bills Yield Declines To 8.7% WoW On Sustained Demand


By Afrinvest Research

Activities last week in the Nigerian Treasury Bills (“NT-Bills”) secondary market kick started on a tepid note as local investors digested the release of inflation data (+37bps to 11.6%). However, N-T-Bills demand picked up steam towards the end of the week as average yield across the curve was further pressured by 2.3% W-o-W to close at 8.7% from 10.9% the previous week.

The short-term bills witnessed continued buying interest thus dipping, 2.0% W-o-W from 10.5% in the previous week to 8.6% last week. In the same vein, the medium- and long- term bills experienced higher demand declining 2.3% Wo-W apiece.

Despite the high liquidity level on Thursday (N411.9bn long) in the financial system, the Apex bank did not conduct an Open Market Operation (“OMO“) auction throughout last week, leaving system liquidity elevated (N548.3bn positive) as at Friday.

 Please see indicative secondary market NT-Bills rates below:

Maturity Tenor (Days) Rate (%) p.a. Yield (%) p.a.
2-Jan-20 38 6.00 6.04
30-Jan-20 66 7.30 7.40
2-Apr-20 129 8.01 8.24
13-Aug-20 262 8.90 9.51
24-Sep-20 304 9.30 10.08
29-Oct-20 339 9.70 10.66


Moving on to the new week, we expect a quiet session ahead of the Primary Market Auction (“PMA”) on Wednesday where NT-Bills maturities worth N150.6bn will be rolled over and issued across the 91-day (N24.4bn), 182-day (N23.2bn) and 364-day (N103.1bn).


Auction Date 27-Nov-19 27-Nov-19 27-Nov-19
Allotment / Issue Date 28-Nov-19 28-Nov-19 28-Nov-19
Tenor (91-Day) (182-Day) (364-Day)
Offer Amount (N) 24,372,790,000 23,157,656,000 103,071,723,000
Previous Stop Rates 7.80% 9.00% 10.00%
Expected Stop-rates 7.5%-7.85% 8.85%-9.00% 9.6%-10.00%


However, we also cannot rule out the possibility that investors continue to source for more risky, higher yielding investments, thus tapering current demand. Investors are thus advised to cherry-pick the most attractive NT-Bills instruments in the first trading sessions as, more attractive short-term sovereign bonds serves as an alternative for investors with longer time horizons.

FGN Bonds Market Update: Flat Performance due to Narrowed Demand in the Secondary Market as Average Yield Remained 12.3% WoW

Last week, the bonds market recorded a slowdown of the bullish momentum sustained over the last few weeks as investors digested inflation figures as well as anticipated the primary market bond auction that held on Wednesday. As a result, average yield remained flat at 12.3% W-o-W across the curve with the 27-APR-23 (+62bps) witnessing the most selloffs. Conversely, the 18-APR-37 (-24bps) and 23-MAR-25 (-23bps) witnessed the most buying interest.


On Wednesday, the Debt Management Office (“DMO”) held a Primary Market Auction (“PMA”) where they offered a total of N150.00bn across 5- (N50.00bn), 10-(N50.00bn) and 30-Year (N50.00bn) tenors.


Please see detailed result of the auction below:

Auction Date 20-Nov-19 20-Nov-19 20-Nov-19
Allotment/Issue Date 22-Nov-19 22-Nov-19 22-Nov-19
Term to maturity 3 Years, 5 Months 9 Years, 5 Months 29 Years, 5 Months
Offer Amount (N) 50,000,000,000.00 50,000,000,000.00 50,000,000,000.00
Total Subscription (N) 43,050,000,000.00 94,210,000,000.00 115,090,000,000.00
Allotment (N) 19,870,000,000.00 61,700,000,000.00 76,360,000,000.00
Range of Bid Rates (%) 13.9900 – 14.6500 13.9900 – 15.0000 13.0000 – 15.0999
Stop rates (%) 12.00 12.93 13.39
Previous stop rates (%) 14.05 14.2333 14.6
Bid-to-Cover Ratio 0.9x 1.9x 2.3x
Allotment Ratio 0.4x 1.2x 1.5x


This week, we expect the outcome of the MPC meeting slated for Monday and Tuesday to guide market performance and anticipate an improvement in activity toward the end of the week. Therefore, we advise investors to take advantage of attractive yields on the 2023s and 2024s maturities


Please see indicative bond rates below:

Bond Tenor (Years) Yield (%) Coupon (%) Implied Price (N)
Jul-21 2 10.80 14.50 105.38
Jan-22 3 10.90 16.39 110.31
Apr-23 4 11.32 12.75 103.94
Mar-24 5 11.30 14.20 109.62
Mar-25 6 11.10 13.53 109.54
Jan-26 7 11.30 12.50 105.18
Mar-27 8 11.70 16.29 122.08
Feb-28 9 12.18 13.98 109.15
Jul-34 15 12.17 12.15 99.82
Mar-36 17 12.20 12.40 101.36
Apr-37 18 12.13 16.25 129.55
Apr-49 30 12.80 14.80 115.19

Rates are valid till 01:45pm today (25-Nov-19)

*Please note that the minimum subscription for T-Bills is N20,000,000.00


This site uses Akismet to reduce spam. Learn how your comment data is processed.