Economy & Market

Bullish Sentiment Prevails at the Treasury Bills Market

The Treasury Bills market exhibited a bullish sentiment last week, primarily fueled by strong demand, as indicated by substantial subscription volumes at the auctions (both Open Market Operation (“OMO”) and Nigerian Treasury Bills (“NTB”) auction), significantly surpassing the amounts offered and allotted. This intense demand led to a surge of unmet bids moving into the secondary market, which, in turn, pushed the average benchmark yield down by 18bps, closing at 22.44%.

Specifically, buying interests were predominantly concentrated at the short end of the curve, where the average yield decreased by 7bps to 24.6%. In the long end, the trend was similarly bullish, especially noticeable on the 24-Apr-25 maturity, which saw a substantial reduction of 525bps, settling at 20.34% week-over-week. Meanwhile, the mid-section of the curve remained relatively flat throughout the week.

Last Wednesday, 08-May-24, the Apex Bank offered ₦179.36 billion across three tenors, total subscription amounted to ₦914.08 billion with only allotted value of ₦274.66 billion. Stop rates closed at previous auction levels of 16.24%, 17.00%, and 20.70% on the 91-, 182-, and 364-day papers.

This week, we anticipate that investors will continue trading in line with the current market sentiment, influenced by prevailing liquidity conditions. Thus, we advise investors to look out for relatively attractive bills across the curve, as well, as possible commercial paper offerings.

FGN Bond Update

Last week, the domestic FGN Bond market showed mixed activity, at the short to mid-end of the yield curve, a dominant selling bias was observed, while the long end saw a pronounced buying bias, leading to significant yield declines. Consequently, average benchmark yield decreased 21bps week-over-week, settling at 18.54%.

Specifically, the bullish sentiment was strongly evident in maturities such as the FGN 2042s, FGN 2049s, FGN 2050s, and FGN 2053s, where yields fell to 17.59%, 17.56%, 17.65%, and 17.42%, respectively. Conversely, aside from the 21.00% FGN 2026s and 21.00% FGN 2028s that saw marginal yield declines in the short end, other maturities witnessed dominant sell bias.

Today, Monday (13-May-24), at the Primary Market Auction (“PMA”), the Debt Management office (“DMO”) will be offering a total of ₦450.00bn across the APR-2029, FEB-2031, and MAY-2033 maturities

This week, we expect performance to be driven by the auction result. Hence, we advise investors to take advantage of maturities with relatively attractive offers in the secondary market particularly at the short end of the curve.


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