Last week, the Nigerian Treasury Bills (“NT-Bills”) secondary market sustained the bearish outing as average yield advanced 34bps w-o-w to settle at 25.23% from 24.89% recorded in the previous week. The bearish performance was occasioned by the slight liquidity crunch exacerbated by the Primary Market Auction (“PMA”).
Although mild bullish sentiment was witnessed across several maturities ranging from the short to long term instruments, sell-offs in the 22-Aug-24, 27-Mar-25 and 10-Apr-25 which advanced their yields by 145bps, 192bps and 202bps respectively plunged the market into a bearish close.
At the PMA held on Wednesday 24-Jul-24, the Apex bank offered a total of N277.96bn across the 91-, 182- and 364-Day instruments. The offer maintained a significant level of demand tilted towards the longer-dated bill indicating the market’s response to a higher interest rate climate. The total bid-to-cover ratio stood at 1.35x (₦277.96bn offer vs. ₦373.95bn subscription).
Consequently, the stop rates on the 91-, 182- and 364-Day instruments rose to close at 18.50%, 19.50% and 22.10% respectively.
Going into this week, we expect the bearish sentiment to persist on the back of tight system liquidity. We advise investors to trade cautiously and take advantage of relatively attractive bills across the curve along with commercial paper offerings.
Afrinvest
