Nigeria’s financial market would be awash with liquidity worth N556.1 billion this week from maturing government instruments such as treasury bills and Open Market Operation (OMO) bills.
The expected inflow would bolster system liquidity levels by 1.87 percent compared to N545.9 billion it stood on Thursday last week.
A breakdown of the inflows shows that the Central Bank of Nigeria (CBN) would rollover maturing bills worth N74.8 billion at the Primary Market Auction (PMA) across the 91-day (N10.0bn), 182-day (N20bn) and 364-day (N44.8bn) tenors. Also, N481.3 billion worth of maturing OMO bills are scheduled to hit the system this week.
“We anticipate sustenance of the mild bullish sentiments in the NT-Bills secondary market, as investors may seek to fill possibly unmet bids following PMA and therefore maintain our advice that investors look out for relatively higher yielding alternatives including corporate offers,” analysts at Afrinvest Securities Limited, said.
A report by Afrinvest shows that the Nigerian Treasury Bills (NT-Bills) secondary market last week witnessed a slight improvement in activity levels during the four-day trading week, as average yields across all tenors contracted marginally by 1bp Week-on-Week to 0.39% from 0.40% the previous week. Particularly, the 9-Sep-21 and 16-Sep-21 instruments enjoyed the most buying interests, declining 14bps and 15bps W-o-W, respectively.
Consequently, average yield on the short- and long-dated maturities recorded some buying activities as their average yields dipped 3bps and 5bps W-o-W to settle at 0.33% and 0.48%, respectively. Conversely, the medium-term maturities witnessed sell-offs as its average yield expanded 6bps W-o-W to 0.29% from 0.23% the previous week.
At the bond market this week, the FGN bonds secondary market will sustain its bearish posture as local investors continue to sell-off positions as the year comes to a close.
“We advise investors to take advantage of the relatively improved yields along the curve,” the analysts said.
Last week, the FGN Bond secondary market sustained its bearish streak as domestic players continued to exit positions ahead of the close of the year. Consequent on this, average yields across the curve advanced 56bps W-o-W to 5.9% from 5.4% the previous week.
Particularly, the 23-MAR-25, 14-MAR-24 and 23-FEB-28 instruments witnessed the most sell-offs, expanding 159bps, 135bps and 128bps W-o-W, respectively.
At the foreign exchange market, the naira on Tuesday reversed previous gains as the dollar sold for N470, representing 1.07 percent loss compared to N465 traded since last Thursday on the black market.
At the Bureau De Change (BDC) segment of the foreign exchange market, the naira steadied at N475 per dollar since last week.
The naira had strengthened as a result of increased supply from Diaspora remittances following recent policies by the Central Bank of Nigeria (CBN).
On November 30, the CBN said beneficiaries of diaspora remittances through the international monetary transfer operators (IMTO) shall have such inflows in foreign currency (US dollar) through the designated bank of their choice.
In a statement on the same day, signed by Ozoemena Nnaji, director of trade and exchange, the CBN said recipients of such remittances might have the option of receiving these funds in foreign currency cash or into their domiciliary account.
