Inflows worth N334.5bn to hit Nigeria’s market Wednesday

… Naira steadies at N520 at parallel market

Inflows worth N334.5 billion are expected to hit Nigeria’s financial market on Wednesday, raising the system liquidity levels to N406.8 billion from N72.3 billion levels on Friday.

A breakdown of the inflows showed that a total of N157.2bn worth of maturing Nigerian Treasury Bills (NT-Bills) will be rolled over by the Central Bank of Nigeria in the Primary Market Auction (PMA) on Wednesday, while N177.3 billion would come from maturing Open Market Operation (OMO).

In view of this, analysts at Afrinvest Securities Limited advise investors to continue to position in relatively attractive bills across the curve while also looking out for possible corporate offerings.

Last week, the Nigerian Treasury Bills (NT-Bills) secondary market sustained a bullish run amidst pressured liquidity levels (which fell to N72.3bn short on Friday), due to persistent demand on the long-dated maturities (as average yields contracted 56bps Week-on-Week). Consequently, the average yield dipped by 8bps W-o-W to close at 4.69 percent from 4.77 percent in the previous week.

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At the foreign exchange market, naira steadied at N520 at the parallel market, popularly known as the black market.

The local currency weakened by 0.04 percent as the dollar was quoted at N411.83 on Monday as against the last close of N411.67 on Friday at the Investors and Exporters (I&E) forex window.

Currency traders who participated in the trading session on Monday maintained bids between N400.00k and N413.00k per dollar.

The foreign exchange market daily turnover increased significantly by 203.62 percent to $173.64 million on Monday from $57.19 million recorded on Friday, data from the FMDQ indicated.

The overnight (O/N) rate decreased by 6.33 percent to close at 17.50 percent on Monday as against the last close of 23.83 percent on Friday, and the Open Buy Back (OBB) rate decreased by 5.83 percent to close at 17.50 percent compared to 23.33 percent on the previous day.

NT-Bills secondary market closed on a flat note on Monday, with the average yield across the curve remaining unchanged at 4.68 percent, a report by the FSDH research stated.

Average yields across short-term, medium-term, and long-term maturities closed flat at 3.47 percent, 4.34 percent and 5.68 percent, respectively.

In the OMO bills market, the average yield across the curve remained unchanged at 5.95 percent. Average yields across short-term, medium-term, and long-term maturities closed flat at 5.36 percent, 6.18 percent, and 6.65 percent, respectively.

At the bond market this week, analysts at Afrinvest expect reduced buying interest in the FGN bonds secondary market, in line with the Federal Government’s plans to commence the issuance of a planned $6.2bn Eurobond in September 2021.

“Therefore, we advise investors to cherry-pick bonds with relatively attractive yields across the curve,” an Afrinvest analyst said.

The FGN bonds secondary market sustained its bullish trend last week, as funds were channelled from unmet bids at the PMA. As a result, average yield across all maturities dipped 16bps W-o-W to settle at 11.38 percent (from 11.56% the previous week), with the most buying interests recorded on the 17-Mar-27 (-76bps W-o-W) and 14-Mar-24 (-39bps W-o-W) maturities.

At the PMA, the Debt Management Office’s (DMO) total offer of N150.0bn was met with strong demand, recording an overall subscription of 2.1x. In addition, the highest subscription at the auction was recorded in the 2050s which had N177.4bn subscription. Furthermore, the DMO reduced the stop rate offered across all offers to 11.60 percent, 12.75 percent, and 12.80 percent (from 12.35%, 13.15% and 13.25% respectively) while the total bid-to-cover ratio stood at 1.35x.

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