• Friday, May 24, 2024
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Increased trading expected Friday as investors cover lost bids, reinvest N133.97bn maturing NT-Bills

Investors interest rise in Nigerian government securities

Nigeria’s money market may witness increased trading activities after the holiday as investors are expected to cover lost bids from the Primary Market Auction (PMA) and seek to re-invest maturing NT-Bills worth N133.97 billion.

The Central Bank of Nigeria (CBN) on Wednesday offered NT-Bills worth N113.97 billion across the 91-day (N10.00 billion), 182-day (N17.60 billion), and 364-day (N86.37 billion) tenors.

Ayodeji Ebo, investment professional based in Lagos, said the stop rates declined marginally across all tenors on high subscription level. The 364-day bill dropped to 2.8 percent.

Nigeria’s treasury bills market closed on a positive note on Wednesday with average yield across the curve declining by 2 bps to close at 1.85 percent from 1.87 percent on the previous day. Average yields across short-term and medium-term maturities compressed by 1 basis point and 7 bps, respectively, due to maximum buying interest witnessed in the NTB 25-Feb-21 (-10 bps) and NTB 11-Feb-21 (-9 bps) maturity bills, a report by FSDH research stated.

“The era of high returns from Nigerian Treasury Bills ended in 2019. Today, investors need to invest in a variety of other asset classes in order to obtain a reasonable return, without becoming totally exposed to any one asset class. That means that investment management is more complex and more necessary than before,” Guy Czartoryski, head of research at Coronation Asset Management, said.

“Second, there needs to be more information on fund performance in order to facilitate fund selection by investors and professional advisers.

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“Fortunately, the industry and its regulator are moving in this direction, preparing the ground for a hugely expanded Mutual Fund industry in future, and creating the conditions for a significant capital base for the nation,” Czartoryski said.

However, the average yield across long-term maturities remained unchanged at 2.54 percent at the Primary Market Auction held on Wednesday.

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In the Open Market Operation (OMO) bills market, the average yield across the curve declined by 2 bps to close at 1.86 percent against the last close of 1.88 percent. Buying interest was seen across medium-term and long-term maturities with average yields falling by 5 bps and 4 bps, respectively, while selling pressure was witnessed across short-term maturities with the average yield rising by 3 bps.

Yields on 7 bills declined with the 30-Mar-21 maturity bill registering the highest yield decline of 43 bps, while yields on 8 bills advanced with the 24-Nov-20 maturity bill recording the highest yield increase of 8 bps, the report noted.

Nigeria’s currency was stable on Thursday as the dollar traded at N464 N465 on the black market and Bureau De Change (BDC).

On Wednesday naira firmed against the dollar, gaining N2.33k after exchanging at an average rate of N461.66k from N464 on Tuesday on the black market.

About 5,000 BDCs funded their accounts on Wednesday but would receive disbursement on Friday instead of Thursday due to the holiday.

Aminu Gwadabe, president, National Association of Bureau De Change Operators of Nigeria (ABCON), told BusinessDay on Wednesday that information on account funding has been shared among the BDCs early enough.

The CBN had changed the dollar purchase days for BDCs to Tuesday and Thursdays from Mondays and Wednesdays.