Analysts Expect Investors to Remain Bullish on Treasury Bills
Analysts have said that they expect bullish momentum in the treasury bills market to be sustained this week on robust financial system liquidity.
This week, market anticipates inflows from maturing Open Market Operation (OMO) bills worth N300 billion and bond coupon payments of about N18.1 billion will likely bolster system liquidity.
Last week, the Nigerian Treasury Bills secondary market witnessed another bullish run, due to sustained demand amid decent liquidity levels (N216.1 billion long on Friday).
Afrinvest, a leading investment banking firm, said although the week kicked off on a calm note, as investors anticipated the Nigerian Treasury-Bills Primary Market Auction.
It recalled activities picked up by Thursday following inflows from Open Market Operation maturities (N350.0bn) and unfilled PMA bids (N45.4bn) that filtered into the secondary market.
Consequently, Afrinvest said average yield dipped 15 basis points (bps) week on week to close at 1.6% on Friday.
In more detail, strong demand was observed on the short and intermediate bills down 48bps and 9bps week on week respectively.
Analysts noted that the 01-Oct-20 (-55bps), 15-Oct-20 (-54bps) and 29-Oct-20 (-52bps) bills recorded the most buying interests.
Conversely, the long-term instruments advanced 8bps week on week following slight sell offs.
At the NT-Bills PMA, the CBN offered N158.8 billion worth of bills across the 91- Day, 182- Day and 364-Day tenors which met a 1.3x bid-to-cover ratio (total demand of N204.2bn).
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However, stop rates on the short- and medium-term bills declined by 1bps and 5bps respectively, while the stop rate on the long- term bills remained unchanged.
Also, the CBN also conducted an OMO auction on Thursday to mop up excess liquidity in the system. A total amount of N70.0bn was offered and sold across the 138-, 173-and 355-Day instruments.
The offer of N70.0 billion (20% less than the N350.0 billion that matured) was met with a total subscription of N196.5bn which translated to a 2.8x bid-to-cover ratio.
Afrinvest said all tenors were oversubscribed and average stop rates moderated by 1bps to 7.1%.
“This week, we expect the bullish momentum to be sustained as anticipated inflows from maturing OMO bills (N300.0bn) and bond coupon payments (c. N18.1bn) will likely bolster system liquidity.
“Investors are advised to cherry pick attractive instruments across the yield curve“, Afrinvest remarked.
Analysts Expect Investors to Remain Bullish on Treasury Bills
