T-Bills Yield Rises to 3.9% as Sell-off Hits Bond Market

T-Bills Yield Rises to 3.9% as Sell-off Hits Bond Market

Average yield on Nigerian Treasury bills rises to 3.9% on Wednesday from 3.5% amidst sell-offs in bond market following the monetary authority decision to hold key policy rates.

Yields rose in the T-bills space, resulting from selloffs at the long end of the market. Against this backdrop, the average T-bills yield increased by 36 basis points.

Elsewhere, funding pressure was elevated as the Open Buy Back and Over Night rates rose to 13.5% and 14.0% apiece, up from their previous rates of 11.5% and 12.0%.

Similarly, the average open market operations (OMO) yield advanced by 23bps to 6.6%, as market participants exited their positions on short-dated bills.

Amid the Primary Market Auction (PMA), the bears resurfaced in the Bond market, pushing the average yield up 11bps to 9.6%.

“We observed investors’ apathy at the long segment of the market which closed flat, while the short end (+27bps) and belly of the curve (+10bps) increased”, Greenwich Merchant Bank said in a commentary.

The banking group also noted that the 27-JAN-2022 instrument sold off the most, rising +159 basis points. In the currency market, Naira maintained stability at the parallel FX market, at N486.00 per dollar.

At the investors and exporters window however, the currency appreciated by NGN1.05 per dollar to close at N408.75 from N409.80 per dollar.

In addition, the outcome of the Debt Management Office’s (DMO) March bond auction was mixed, as clearing rates closed largely flat at 11.10%.

The DMO offered N150 billion, but demand was strong with investor subscription pegged at N333.48 billion, implying a bid-offer ratio of 2.2x, compared to 1.3x in February.

Chapel Hill Denham however noted that Investors’ thirst for yield was relatively moderate, hence, the DMO allotted as much as N262.10bn at the open auction, to take full advantage of the auction outcome.

NSE Index Rally on Buying Interest in Dangcem, MTNN, Stanbic

Elsewhere, the Nigerian Stock Exchange (NSE) index rally 0.98% Wednesday on buying interest in large cap stocks like Dangote Cement, MTN Nigeria and Stanbic IBTC stocks.

After yesterday loss, the domestic equities market closed on a positive note as the All-Share Index rose 98 basis points to 39,085.78 points.

Today gain moderated year to date loss to -2.9% as market capitalisation expanded by N199.2 billion to close at N20.4 trillion.

Specifically noted was positive price movement in DANGCEM (+2.3%), MTNN (+2.4%), and STANBIC (+10.0%) that weighed positively on market performance.

Consequently, investors gained ₦199.2 billion as market capitalisation rose to ₦20.4 trillion.

Trading activity waned as volume and value declined 11.8% and 4.7% respectively to 361.9 million units and ₦5.7 billion.

The most traded stocks by volume were UBN (79.3 million units), GUARANTY (72.6 million units), and VERITASKAP (50.2 million units).

Meanwhile GUARANTY (₦2.3 billion), MTNN (₦1.1 billion) and DANGCEM (₦451.9 million) led by value.

Bullish Sector Performance

“Across sectors that we cover, performance was bullish as 4 indicators trended northward. The AFR-ICT index led the gainers, up 1.2% due to price appreciation in MTNN (+2.4%)”, Afrinvest said.

Similarly, the Oil & Gas, Industrial Goods and Consumer Goods indices rose 0.7% apiece on account of buying interest in OANDO (+8.7%), DANGCEM (+2.3%), GUINNESS (+8.8%), and INTBREW (+2.8%).

On the flip side, profit-taking in WAPIC (-9.1%), MANSARD (-2.0%), ETI (-2.1%) and ACCESS (-0.6%) dragged the Insurance and Banking indices lower by 0.6% and 0.2% respectively.

Investor Sentiment Strengthens

Investor sentiment, as measured by market breadth strengthened to 1.3x from the 1.0x recorded previously as 20 stocks gained against 15 decliners.

STANBIC (+10.0%), NPFMCRFBK (+9.6%) and CORNERST (+8.9%) were the top gainers while MRS (-9.7%), WAPIC (-9.1%) and WAPCO (-7.1%) were the top decliners.

“In the subsequent trading session, we expect profit-taking in the local bourse”, Afrinvest stated.

Read Also: Nigeria’s Debt Market Records Week Long Strong Sell-offs

T-Bills Yield Rises to 3.9% as Sell-off Hits Bond Market