Last week, activity in the Nigerian Treasury Bills (“NT-Bills”) secondary market ended on a negative note as tight system liquidity (which was N1.6trn short, as of Thursday 11-Jul-24) weighed on demand. Consequently, Average yield expanded 57bps w-o-w to close at 23.30% from 22.76% recorded in the prior week.
Sell-offs were witnessed at the mid and long end of the curve as their average yields expanded 141bps and 69bps respectively. The most significant surge was recorded on the 5-Dec-24, 23-Jan-25, and 12-Mar-25 bills, increasing by 44bps, 92bps, and 99bps W-o-W respectively.
At the Primary Market Auction (“PMA”), held last week Wednesday, 10-Jul-24, the Apex bank offered a total of ₦166.10bn across the 91-, 182- and 364-Day instruments. The offer recorded an oversubscription on all tenors with a total bid-to-cover ratio of 0.54x (₦166.10bn offer vs. ₦308.66 subscription).
As a result, the stop rates on all tenors closed at 16.30%, 17.44% and 21.24% with the 364-day paper enjoying the most buy interest as its bid to cover ratio improved to 0.51x from 0.24x recorded at the previous auction.
This week, we expect the bearish sentiment to persist, on the back of the prevailing liquidity conditions (Which closed negative at N663.82bn as of Friday, 12-Jul-24). Thus, we advise investors to look out for relatively attractive bills across the curve, as well, as possible commercial paper offerings.
Afrinvest
