The Central Bank of Nigeria (CBN) will conduct a primary market auction today to roll over N89.5bn worth of Treasury bills maturing on Thursday, across the 91-day (N5bn), 182-day (N14bn) and 364-day (N70.5bn) tenors.
The 91-day tenor had a last stop rate of 10.90 per cent and is expected to have a stop rate between 10.50 per cent and 10.99 per cent at the end of the week.
The 182-day tenor, which had a last stop rate of 13.01 per cent, is expected to close at a rate between 12.95 per cent and 13.20 per cent.
The 364-day tenor had a last stop rate of 14.37 per cent and an expected stop rate range of 13.50 per cent and 13.90 per cent.
The bullish sentiment in the treasury bills secondary market was reversed last week (after two weeks) as the apex bank increased its frequency of liquidity controls via Open Market Operation auctions, albeit offering only short-tenor and mid-tenor bills.
Consequently, the average yield across tenors advanced by 51 basis points week-on-week to 13.5 per cent from the 13 per cent recorded in the previous week.
Accordingly, the short-term and medium-term instruments increased by 101bps and 135bps week-on-week, respectively, following sell-offs as investors took a position in bills offering higher yields at the OMO auctions.
The long-term bills also advanced marginally by six basis points week-on-week, despite sustained demand witnessed for the most part of the week.
The CBN offered a total of N900bn at the OMO auctions, which were conducted on all trading sessions last week except Wednesday and successfully mopped up approximately N809bn out of a 1.1x over-subscription of N945.3bn.
The medium-term bill had more interest as N800.8bn was subscribed against the N570bn offered.
On the other hand, the short-term bill received mild attention with a total of N144.5bn subscription against the N330bn offered, depicting a 0.4x ratio.
Analysts at Afrinvest Securities Limited said, “We expect this week’s PMA to witness strong demand, especially on the 364-day instrument hence, we anticipate lower moderation in rates as witnessed in OMO auctions conducted last week.
“Additionally, we believe the CBN may continue the trend of regular liquidity mop-ups (N26.4bn positive as of Friday last week) albeit at a slower pace and offering only short and medium bills, thus further raising demand for long-term bills.”
They advised investors to take full advantage of the primary offerings, specifically the 364-day bill, saying the stop rate of the long-term bills at the PMA was expected to guide rates of similar bills in the secondary market.