Nigerian Treasury Bills Market Records Strong Demand
The Nigerian Treasury Bills market recorded strong demand on Wednesday as investors continue to scramble for high returns amidst relatively excess liquidity.
In a note, analysts at Chapel Hill Denham said strong demand at the Nigerian Treasury Bills market is expected due to level of funding available in the financial system.
However, analysts explained further that the ramped up at the NTB auction resulted in the auction clearing below 1% for the first time in at least 15 years.
The Debt Management Office offered ₦154.37 billion across three tenors, while subscription totaled ₦821.49 billion, implying a bid-cover ratio of 5.3x as against previous record of 4.9x previously.
However, the DMO allotted the same amount offered, while stop rates compressed by an average of 73 bps to 0.61% for ₦7.5 billion of 91-day at 0.341% (-66bps from 1.00%), N6.0bn of 182-day at 0.50% (-50bps from 1.00%), and ₦140.9bn of 364-day at 0.98% (-102bps from 2.00%).
“We expect the market to trade upbeat on Friday, as investors look to cover lost bids in the secondary market”, analysts said.
The financial system liquidity which opened substantially higher at N790 billion Wednesday from N484.5bn in the previous day keeps funding pressure minimal.
As a result of that, money market rates remained at low single-digit.
Notably, the Open Buy Back (OBB) rate closed flat at 1.00% Wednesday, while the Overnight (OVN) rate eased by 12bps to 1.63%.
On that note, Chapel Hill Denham said they expect funding pressures to remain low when the market re-opens on Friday.
Meanwhile, the fixed income market traded largely flat today as primary market auction was under-way.
At the front-end of the curve, the benchmark NTB and OMO curve closed flat at an average of 0.45% and 0.58% respectively.
Similarly, in the bond market, average yield on benchmark tenors rose marginally by a basis point , as the slight downward repricing of yields at the short end of the curve (-1bp to 2.74%) was offset by upward repricing on April 2049 30-year benchmark bond (+14bps to 7.14%).
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Nigerian Treasury Bills Market Records Strong Demand
