Investors expect higher rate on N345.28bn inflows

Investors expect mouth-watering stop rates at the Primary Market Auction (PMA) this week, as inflows worth N345.28 billion hit the financial market.

A breakdown of the inflows show that the Central Bank of Nigeria (CBN) will on Wednesday roll over maturing bills worth N115.28billion at the NT-Bills PMA across the 91-, 182-, and 364-day tenors.

Also, Open Market Operation (OMO) maturities worth N230 billion will be released into the market on Thursday. OMO involves buying and selling of government securities by a Central Bank.

The inflows are expected to boost system liquidity, which stood at N173billion as of Friday last week, according analysts at Afrinvest Securities limited.

However, Afrinvest expects a stop rate range of between 4.50 percent and 5.30 percent for a 364-day treasury bill as against that last stop rate of 5.20 percent.

For the 182-day instrument, it expects a rate range of between 3.00 percent and 3.50 percent compared to 3.30 percent, the last stop rate, and 2.00 – 2.5 percent stop rate for the 92-day bill over the 2.48 percent rate offered last week.

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“We advise investors to trade cautiously prior to the outcome of the PMA and take advantage of attractive bills across the curve, especially long dated instruments along with offers from corporates,” the analysts said.

Last week, the Nigerian Treasury Bills secondary market maintained its bullish run as investor sentiments remained positive. The week started on a positive note as buying interest was seen along the long-dated instruments, boosted by demand from unmet PMA bids and buoyant system liquidity (N39.29billion long as at Tuesday).

Consequently, average yield contracted 24bps Week-on-Week to settle at 4.18 percent from 4.43 percent the previous week.

Most demand was witnessed on medium and long-term instruments as their average yields (3.97% and 4.92%) dipped 23bps and 43bps W-o-W respectively. Specifically, the 12-May-2022 (-89bps W-o-W) and 08-Sep-2022 (-127bps W-o-W) bills enjoyed the most buying interest.

Opening the week, the bond market saw continued buy interests across the curve with few trades executed on the day, especially on the 26s and 42s, according to a note from Parthian Partners, Africa’s premier inter-dealer broker.

The treasury bills market recorded mixed sentiments across the curve with activity notable on the long end of the curve. A couple of trades passed through especially on the 26 January and 9 February papers, the note stated.

The domestic bonds secondary market maintained its bullish run last week as buying interest was seen across all tenors. Consequently, average FGN Bond yields shed 35bps W-o-W to settle at 11.15 percent from 11.49 percent the previous week, Afrinvest report noted.