Treasury Stop Rates to Moderate on Expected Liquidity Boost
Analysts at Cowry Asset Limited see stop rates on new issuance to moderate in the week on expectation of improved liquidity in the financial system as total sum of N57.282 Treasury bill matures.
In the just concluded week, the Nigerian Interbank Treasury True Yield (NITTY) moved in mixed directions across maturities tracked amid traders’ mixed sentiments partly due to the muted activity in the primary market last week, Cowry Asset told clients via email.
Accordingly, the investment firm said NITTY for 1 month and 12 months maturities fell to 3.12 % from 3.13% and 9.35% from 9.52% respectively as the fixed income market traded quietly.
On the flip side, analysts hinted that NITTY for 3 months and 6 months maturities expanded to 4.49% from 4.01% and 5.80% from 5.78% respectively amid investors’ sell-off.
Elsewhere, the Central Bank of Nigeria (CBN) issued a total of N17.00 billion last week at the open market operations (OMO) auction to partly drain system liquidity as OMO bills worth N29.40 billion matured.
Hence, analysts said the Nigerian Interbank Offered Rate (NIBOR) fell for most tenor buckets due to financial system liquidity ease.
NIBOR for 1 month, 3 months and 6 months moderated to 10.85% from 12.75%, 12.06% from 13.94% and 13.39% from 15.59% respectively.
However, the overnight funding rate increased to 20.07% from 13.67%.
In the new week, Cowry Asset said in the report that T-bills worth N57.82 billion will mature via the primary and secondary markets to more than offset the T-bills worth N7.00 billion which will be auctioned by CBN via the primary market.
The auction will be split into 91-day bills worth N12.45 billion and 182-day bills worth N25.37 billion. Analysts at Cowry Asset however projected that the stop rates of the new issuances will moderate amid an expected boost in financial system liquidity.
Again, in the just concluded week, the values of the Federal Government of Nigeria (FGN) Bond tracked decreased as yields rose for most maturities tracked amid sell pressure. Read Also: Nigeria’s 20-Year Eurobond Yield Rises to 8.96%
Specifically, the 5-year, 14.50% FGN JUL 2021, 7-year 13.53% FGN APR 2025 and 10-year 16.29% FGN MAR 2027 lost N0.20, N0.40 and N0.46 respectively; their corresponding yields rose to 3.82% (from 3.81%), 11.67% (from 11.54%) and 12.25% (from 12.16%) respectively.
However, the 20-year, 16.25% FGN MAR 2037 gained N1.05 while its yield decreased to 12.77 %( from 12.90%), according to Cowry Asset analysts.
Also, the value of FGN Eurobonds traded at the international capital market increased for most maturities tracked: the 20-year, 7.69% FEB 23, 2038 paper and the 30-year, 7.62% NOV 28, 2047 debt gained USD0.11 and USD0.46 respectively as their corresponding yields fell to 7.46% (from 7.47%) and 7.61% (from 7.66%) respectively.
However, the 10-year, 6.375% JUL 12, 2023 lost USD0.16 while its yield rose to 2.84 % (from 2.79%).
“In the new week, we expect local over-the-counter bond prices to increase (and yields to moderate) as over N400 billion, 5- year bond issued in 2016 matures. Hence, we expect the liquidity boost to stimulate buy pressure”, Cowry Asset told clients.
Treasury Stop Rates to Moderate on Expected Liquidity Boost
