Investors Increase Bets on Treasury Bills Ahead of Auction
Fixed interest income investors increased their respective bets on Nigerian Treasury bills in the secondary market ahead of the midweek auction. Traders explained that only a few trades were consummated due to wide bid-offer spreads.
In its market update, TrustBanc Capital Limited noted that the 6-Mar (-47bps) and 8-May (-150bps) papers recorded the sharpest declines in yield that followed the buying interest in the secondary market.
Traders attention has been projected to shift on Tuesday as the Central Bank of Nigeria (CBN) will be offering investors N513.43 billion worth of maturing bills on Wednesday.
Due to buying interest, the average yield contracted by 27bps to 24.0%, according to Cordros Capital Limited. Analysts said across the curve, the average yield contracted at the short (-4bps), mid (-51bps), and long (-25bps) segments.
The yield contractions were attributed to buying interests in the 80-day to maturity bills whose yield shed -10bps. Investors demand for 171-day to maturity caused its yield line to decline by -144bps while demand for 185-day to maturity dragged its yield lower by -150bps.
Similar experience was witnessed in the OMO bills secondary market, with the average yield declining by 6 bps to 26.2% after the bullish trading session. Ahead of the midweek auction, analysts said subscriptions are expected to be strong, as last month auction details showed supply dipped.
With positive liquidity positions, analysts said they expect investors to bid strongly but decision to sell remains with the CBN. Investment firm reported that the liquidity in the banking system opened the week with a healthy balance of ₦375.53 billion.
As a result, money market rates: the open repo rate declined further by three basis points to close at 19.22%, while the overnight rate inched higher by a basis point to settle at 19.69%, data from the FMDQ platform confirmed.
For spot rate pricing, analysts appear to be having divergent views, striking a balance between market dynamics and the latest spot rate decline on one year bills. #Investors Increase Bets on Treasury Bills Ahead of Auction Equities Investors Wealth Rises as Nigerian Exchange Rally
