As the new trading week commences on Monday, investors are advised to trade cautiously and take advantage of relatively attractive yields along the curve as well as available commercial papers, analysts at Afrinvest Securities Limited said.
This followed anticipated improved demand with a positive liquidity level put at N453.6 billion as of Friday January 28, 2022 and as investors channel their unfilled Primary Market Auction (PMA) bids into the secondary market.
Last week, the Nigerian Treasury Bills (NT-Bills) secondary market started the week on a quiet note as investors anticipated the NT-Bills PMA which was conducted last week Wednesday (27-Jan-22).
As the week progressed, the activity level rose due to improved liquidity (N453.6bn long as of Friday) and as lost PMA bids filtered into the secondary market.
Consequently, the average yield in the market contracted 7bps Week-on-Week to close at 4.34 percent (from 4.41% the previous week).
The average yield in all segments of the market dropped 9bps, 5bps, and 6bps, across the short-, medium-, and long-end of the curve W-o-W respectively. In addition, all instruments recorded yield declines save for the 26-May-22 instrument which advanced 56bps W-o-W, according to a report by Afrinvest.
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At the PMA, the Central Bank of Nigeria (CBN) offered a total of N129.3bn across the 91-, 182- and 364-Day instruments. The offer maintained a significant level of demand as it recorded a total bid-to-cover ratio of 3.7x (N129.3bn offer vs. N475.6bn subscription).
Consequently, stop rate on the 91-, 182- and 364-Day tenor dropped to 2.48 percent, 3.30 percent, and 5.40 percent from 2.50 percent, 3.44 percent, and 5.50 percent respectively at the previous auction.
At the bond market, given over N750bn anticipated in coupon payment and maturity last week, the bond market opened the week with a rally, analysts at Parthian Partners, Africa’s premier inter-dealer broker said.
Demand was skewed to short-dated securities as players sought to reinvest their idle funds. Towards the end of the week, market sentiment was mixed, as the bullish sentiment became weak. The 2026, 2050 and 2028 maturities were the most traded for the week, with yields declining 29bps, week-on-week.
“We expect mixed sentiments with low transaction volumes in the week, as the robust liquidity drops,” said Ola Oladele, vice president, global market, Parthian Partners.
She expects rates to remain at single-digit this week, as the N81 billion expected in the Open Market Operation (OMO) maturity supports liquidity.
