Money Market

Treasury Bills: Bullish Trend Continues as Average Yield Dips

The Nigerian Treasury Bills (NT-Bills) market had a mixed performance last week, starting bullish with declining yields across most maturities. Post-auction, bearish sentiment on the 1-year bill was offset by strong mid-tenor demands, despite low liquidity (which stood at N29.66bn long as of Thursday, 6-Jun-24). Consequently, the average benchmark yield fell by 12bps w-o-w to settle at 21.92%.

Buying interest was primarily focused on the short end of the curve, particularly the 24-OCT-24 bill, which saw a substantial drop of 159bps. Conversely, on the long end, the 06-FEB-25 and 06-MAR-25 bills experienced w-o-w yield increases of 35bps and 37bps, closing at 23.92% and 25.18%, respectively.

Last Wednesday, 05-Jun-24, the DMO offered ₦221.12bn across three tenors, total subscription amounted to ₦713.89 billion with only allotted value of ₦278.42 billion. Stop rates closed at previous auction levels of 16.50%, 17.50%, and 20.67% on the 91-, 182-, and 364-day papers.

On Thursday, 13-Jun-24, the Apex bank is scheduled to offer bills worth ₦44.22bn across the 91-, 182- and 364-Day instruments in the Primary Market Auction (PMA).

This week, we expect the outcome from the PMA to dictate the direction of the market. Thus, we advise investors to look out for relatively attractive bills across the curve, as well as, possible commercial paper offerings.

FGN Bond Update

Conversely, the FGN secondary bond market maintained a downward trend, with significant selling pressure at the mid-segment of the curve driving the average yield up by 4bps w-o-w to 18.60%, from the previous week’s 18.56%.

In more detail, we witnessed selloffs at the short and mid segments of the curve, notably on the MAR-2025, FEB-2031, and JUN-2033 bonds, which declined by 6bps, 33bps, and 4bps, respectively. On the other hand, positive buying interests were sustained at the long end, particularly in the 2049s, 2050s, and 2053s bonds, where the average yield decreased by 12bps w-o-w. This week, the bearish sentiment is expected to persist, barring any positive news that could potentially drive a positive performance in the market. 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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