Categories: Business

Bullish trend expected in money market amidst N154.12bn maturities

There are expectations that activity in the money market will be bullish as the market expects a liquidity boost from the maturing N154.12 billion worth of Treasury and Open Market Operation (OMO) bills.

Also, dealers expect local over-the-counter (OTC) bond prices to appreciate (and yields to moderate) amid an expected boost in financial system liquidity.

Meanwhile, the average yield on Nigerian Treasury Bills continues to fall rapidly amidst a sustained rally across the tenor.

Yield tumbles to 1.5 percent across the tenor following a large decline in spot rates offered by the Central Bank of Nigeria (CBN) at the primary market auction last week.

The auction result indicated that CBN allotted T-bills worth N220.53 billion to fully refinance the N198.34 billion worth of matured Treasury bills. The demand came stronger than anticipated, forcing lower spot rates across 91-day, 181-day and 364-day bills.

The sum offered to investors was split into N1.74 billion for the 91-day, N1.26 billion for the 182-day, and N217.53 billion for the 364-day bills. Investors’ total demand was valued at N959.39 billion against CBN offer worth N220.53 billion while demand for longer-dated bills was valued at N860.35 billion – 89.7 percent of the total subscription.

The apex bank allotted exactly the sum it offered for sale, thus stop rate for all of the maturities declined. Specifically, 364-day bills fell further to 4.78 percent from 7.30 percent. Also, 91-day bill and 182-day bill rates fell to 0.29 percent from 2.00 percent and 1.80 percent from 4.33 percent, respectively.

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