Market Anticipate N309.1b Maturing Bills as Yields Expected to Drop

By Dipo Olowookere

Players in the treasury bills market in Nigeria will look forward to N309.06 billion worth of the government instrument maturing this week via the Open Market Operations (OMO).

During the week, average yields of T-bills are likely to contract as demand rebounds on the back of expected improvement in system liquidity.

Also, the money market rates are expected to remain in the single digit band, barring the resumption of aggressive OMO mop ups by the Central Bank of Nigeria (CBN).

Last week, the Open Buy Back (OBB) and Overnight (OVN), opened in single digit at 4.7 percent and 5.5 percent respectively, indicating an 84bps and 100bps increase from the previous Friday’s close.

This week, there is likely going to be a largely positive performance in the secondary T-bills market as investors with unsuccessful bids at the Primary Market Auction (PMA) last week consider opportunities in the secondary market.

Last week, the market kicked off the year on a bearish note, as average yield expanded by 24 basis points to 13.61 percent, against 13.37 percent the previous week.

Yield expanded at the short (+70 bps) end of the curve, declined at the long (-15 bps) end, and was flat at the mid end.

During the week, at the first NTB auction of the year, the offered bills were 2.4x oversubscribed, with N11.77 billion, N33.93 billion, and N115.85 billion of the 91-day, 182-day, and 364-day bills sold at lower stop rates of 12.55 percent (previously 12.95 percent), 13.93 percent (previously 15 percent), and 14.3 percent (previously 15.57 percent), respectively.