Last week, activity in the Nigerian Treasury Bills (“NT-Bills”) secondary market ended on a negative note as tight system liquidity, (which stood at ₦379.55bn short as of Thursday, Jul-18-24) weighed on demand. Consequently, average yield rose by 188 bps w-o-w to settle at 24.89% from 23.33% the previous week.
Sell-offs were witnessed across the curve, as the average yield on the short-, mid- and long ends of the curve expanded 65bps, 234bps and 391bps respectively. The 5-Sep-24 and 26-Sep-24 bills advanced the most, skyrocketing by 462bps, and 655bps w-o-w respectively.
This Wednesday, 24-Jul-24, the Apex Bank is scheduled to roll over a total of ₦277.96bn at the Primary Market Auction (“PMA”) across the 91-, 182-, and 364-day tenors. At the last auction, stop rates were 16.30%, 17.44% and 21.24% respectively.
This week, we expect the outcome of the PMA and Monetary Policy Committee (“MPC”) meeting to impact the activities in secondary market. We advise investors to trade cautiously and take advantage of relatively attractive bills across the curve along with offers from corporates.
FGN Bond Update
Bearish sentiment persisted in the domestic bond market as investors took positions ahead of the auction slated to hold today, 22-Jul-24. Consequently, the yield advanced 15bps w-o-w to close at 19.41% from 19.26% recorded in the previous week.
A further breakdown shows that selloffs were witnessed majorly at the short and long-ends of the curve, as average yields expanded 21bps and 23bps w-o-w respectively. This is evident in the MAR-2025 and FEB-2035 maturities as their yields rose 82bps and 127bps w-o-w respectively.
At the PMA today, Monday, 22- Jul-24, the Debt Management Office (“DMO”) will offer a total of ₦360.00bn across the APR-2029, FEB-2031 and MAY-2033 maturities.
Going into this week, we expect the outcome of the auction to set the tone for the secondary market. We therefore advise investors to take advantage of maturities with relatively attractive yields across the curve.
