Kayoed Ogunwale 

Trading activities in the nation’s Treasury Bills (NT-Bills) witnessed bullish sentiment last week, as secondary market traded on a positive note due to limited supply in the Primary Market Auction (PMA) that was held on Wednesday (11 -Oct-23), as well as high system liquidity during the week. As a result, average yield declined 148 basis points week on week to settle at 6.52 per cent from 8.13 per cent the previous week.

In detail, buy interests were predominantly witnessed at the long end of the curve, as average yield dipped to 8.58 per cent (203 basis points) especially on the 11-Jul-24 maturity which contracted by 248 points to settle at 8.50 per cent week on week.  Conversely, the short- and mid-end of the curve closed relatively flat for the week.

At the PMA held on Wednesday 11-Oct-23, the Apex bank offered a total of N36.56 billion across the 91-, 182- and 364-Day instruments. The average bid-to-cover ratio surged 434 basis points to settle at 8.78 per cent against 4.44 per cent at the previous auction, indicating an increase in demand. Notably, the 364-day bill instrument registered high demand as its average bid-to-cover ratio rose to 9.94x from 4.45x at the last auction.

This week, Afrinvest securities limited analysts expect a drop in activity level as market focus will be on the FGN bond auction as well as low market liquidity which stood at N344.3 billion on Friday 13-Oct-2023 to sustain buying interest. Thus, they advise investors to trade cautiously and take advantage of relatively attractive bills across the curve along with offers from corporates.

Meanwhile, the FGN bond market closed bearish last week as investors take position ahead of the bond auction scheduled for this week. As such, average yield rose 4 basis points week on week to settle at 14.46 per cent compared to the previous week which closed at 14.41 per cent.

Furthermore, there was notable sell pressure observed at the mid end of the curve, as average yield advanced 23 basis points to settle at 14.49 per cent. This is evident in the APR-2029 up 37 basis points and MAY-2029 up 35 basis points.