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Treasury Bills: Bears Run Riot

Bears Run Riot, As Average Yield Appreciates 156bps W-o-W to 18.80 %
Last week, The Nigerian Treasury Bills (“NT-Bills”) secondary market sustained its bearish run, owing to strong asset repricing across the yield curve. As a result, the average benchmark yield rose 156bps w-o-w to settle at 18.80% as against the 17.24% that was recorded the prior week.

The sell pressure was evident throughout the yield curve, resulting in average yield increases of 1.21%, 1.50%, and 1.78% at the short, mid, and long ends, respectively. The most pronounced selloffs were recorded on the 11-Apr-24, 25-Jul-24, and 20-Feb-25 bills, skyrocketing by 171bps, 219bps, and 286bps w-o-w sequentially.

On Wednesday (13-Mar-24), the Apex bank is scheduled to roll over maturing bills worth N161.50bn at the NT-Bills Primary Market Auction (“PMA”) across the 91-, 182-, and 364-Day tenors.

This week, we anticipate a sustained bearish outing in the secondary market despite a buoyant financial system liquidity, which stood at N2.64trn as at the week close. Thus, we advise investors to trade cautiously and take advantage of relatively attractive bills across the curve along with offers from corporates.

FGN Bond Update: Bears Extends Dominance, as Average Yield Advanced 76bps W-o-W to 18.01%
Last week, the domestic bond market further consolidated on its negative performance as investors shift attention to the NT-bills PMA and the FGN Savings Bond space. As such, the average yield rose 76bps w-o-w to settle at 18.01% from 17.25% recorded the previous week.

Furthermore, sell-offs were consummated across all tenors with average yields on the short, mid, and long term instruments expanding 75bps, 50bps and 96bps w-o-w respectively. This is evident in the FEB-2028, APR-2032, and MAR-2036 instruments, as yield increased 115bps, 98bps, and 238bps w-o-w.

This week, we expect the sell-pressure in the domestic bond secondary market to persist, as investors realign their portfolio on more attractive short-dated papers. We, therefore, advise investors to take advantage of relatively attractive offers in the secondary market, particularly at the short and medium end of the curve.


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