Flour Mills Commercial Paper Offers 14.75% Yield; Offer Closes On Wednesday


February 11, 2019/Afrinvest Research 

Last week, the Treasury Bills (“T-Bills”) market reversed its bullish performance following selloffs across all tenors driven by tight system liquidity (N100.0bn short as at Thursday). Consequently, average yield across all tenors appreciated 141bps W-o-W to close at 14.6% on Friday. Major selloffs were witnessed at the short and medium end of the curve particularly the 21-Mar-19 (+118bps), 21-Feb-19 (+113bps) and 16-May-19 (+103bps) maturities.

In its customary bid to mop up excess system liquidity, the Apex bank conducted OMO auctions on all trading sessions save for Friday. A total of N550.0bn was offered across the short, medium and long-term maturities and this was met with a total subscription of N643.2bn indicating a bid-to-cover ratio of 1.2x. In line with the trend witnessed the previous week, the short and long-term instruments were oversubscribed with a bid-to-cover ratio of 1.6x and 1.4x respectively due to more attractive yields relative to the secondary market instruments. On the other hand, the medium-term instrument did not enjoy much of investors’ participation with a bid-to-cover ratio of 0.3x (N140.0bn offered vs. N47.4bn subscription).

This week, the CBN will be conducting a Primary Market Auction (“PMA”) on Wednesday where a total of N153.4bn worth of maturing T-Bills will be rolled over the 91- (N3.4bn), 182- (N10.0bn) and 364-day (N140.0bn) tenors. Please see below our PMA expectations:

Tenor 91-Day 182-Day 364-Day
Offer Amount (N) 3,384,180,000 10,000,000,000 140,000,000,000
Last Stop Rate (%) 11.0000% 13.5000% 15.0000%
Expected Stop Rate Range (%) 10.90%-11.20% 13.10%-13.55% 14.90%-15.10%

Furthermore, we expect to see buying interests in the secondary market ahead of the general elections on the back of a buoyant system liquidity from OMO and T-Bills maturities worth N629.9bn and N153.4bn respectively as well as bond coupon payments worth N47.1bn. However, we expect the CBN to sustain its aggressive OMO issuances to tighten liquidity levels. Investors are advised to position in attractive OMO bills (short and long-term maturities) as well as selected secondary market bills.

Please see indicative T-Bills rates below:

Maturity Tenor (Days) Rate (%) p.a. Yield (%) p.a.
21-Mar-19 38 9.00 9.09
18-Apr-19 66 9.50 9.67
02-May-19 80 9.40 9.60
16-May-19 94 10.40 10.69
12-Sep-19 213 13.30 14.42
24-Oct-19 255 13.85 15.33
09-Jan-20 332 14.01 16.06
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 (11-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

Flour Mills of Nigeria PLC Commercial Paper Offers 14.75% Yield for 180 days – Offer Closes on Wednesday (13-Feb-19).

Please be informed that Flour Mills of Nigeria PLC is seeking to raise up to ₦6.0bn in the sixth series of its ₦100.0bn Commercial Paper (“CP”) Programme to support its short-term funding requirements.
Please see below the details of the offer:

Issuer Flour Mills of Nigeria PLC
Size ₦100.0 billion
Tenor 180 days
Effective Yield 14.7500%
Discount Rate 13.7498%
Issuer Rating ‘A2’(Short term) and ‘BBB+’(Long term) by Global Credit Rating Co. Limited
Subscription Minimum of ₦5 million and multiples of ₦1,000 thereafter
Offer Open Thursday, February 7th, 2019
Offer Close Date Wednesday, February 13th, 2019
Allotment Date Thursday, February 14th, 2019

*Please note that the minimum subscription for the Commercial Paper is N5,000,000.00

FGN Bonds Market Update: Bullish Run Sustained

Last week, buying interests particularly by offshore investors sustained the bullish run witnessed in the bonds market at the previous trading sessions. Consequently, average yields across all tenors declined by 6ps W-o-W to close at 14.8%on Friday. Major buying interests were witnessed at the shorter-end of the curve – 22-Mar-19 (-58bps), 12-Apr-19 (-34bps) and 14-Feb-20 (-21bps) maturities.

Investors are advised to cherry pick and take position in bonds trading at a discount and with attractive yields across the curve.

Please see indicative FGN bond rates below:

Bond Tenor (Years) Yield (%) Coupon (%) Implied Price (N)
Feb-20 1 14.40 15.54 101.03
Jul-21 2 14.55 14.50 99.87
Jan-22 3 14.24 16.39 105.03
Mar-24 5 14.18 14.20 100.03
Jan-26 7 14.53 12.50 91.28
Mar-27 8 14.45 16.29 108.57
Feb-28 9 14.70 13.98 92.03
Jul-34 15 14.49 12.15 85.69
Mar-36 17 14.50 12.40 86.80
Apr-37 18 14.36 16.25 112.04

Rates are valid till 01:45pm today (11-Feb-2019)

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

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