Treasury Bills: Average yields drop further  

Average yield across all tenor dropped 1 basis point to close at 4% at the close of week on Friday.

Meanwhile, the market anticipates release of the second quarter T-bills issue program by the apex bank this week.

Performance in the Nigerian Treasury Bills market was mixed albeit slightly bullish as average yield across all tenors shed 1bp to close at 4.0% on Friday.

Analysts at Afrinvest recalled that the week started off on a bearish note as investors traded cautiously amidst the COVID-19 breakout fears.

Sell offs were witnessed on the short and medium term maturities.

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However, activities picked up on Thursday following improved system liquidity from matured OMO instruments.

Medium-term maturities particularly the 16-Jul-20 (+154bps) and 30-Jul-20 (+126bps) witnessed the most sell-offs.

It was noted that investors demand intensified on the longer-end of the curve especially the 14-Jan-21 (-109bps) and 26-Nov-20 (-84bps) instruments.

Meanwhile, open market operation (OMO) maturities worth N232.3 billion hit the system on Thursday. The Apex Bank conducted an auction on the same day, offering a total of N100.0bn across three tenors.

While there was no sale on the short and medium term instruments, the 362-day tenor was 1.4x oversubscribed.

Total sum of N80.0 billion was offered but N112.1 billion subscription was received.

Consequently, the CBN sold a total of N110.5 billion with the marginal rate contracting by 1 basis point to 12.99%.

“We anticipate the release of the second quarter NT-Bills issue programme by the Apex bank in the current week”, Afrinvest noted.

Analysts said: “a total of N86.3 billion worth of Treasury Bills is expected to mature on Thursday and we expect the CBN to roll this over”.

Going into the week, we expect to see an improvement in system liquidity due to matured OMO and T-Bills maturities of about N141.0 billion.

However, the drastic drop in oil prices to about $35.0 per barrel coupled with the second confirmed case of COVID-19 in Nigeria will likely spook investors and cause further sell-offs.

“Thus, we advise investors to trade cautiously while taking advantage of attractive opportunities along the yield curve, as well as expected CP offers”, Afrinvest held.#

Treasury Bills: Average yields drop further  

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