Equal amount of T-Bills maturities, auctions to keep rates steady

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8 years ago

Money market rates are expected to trade around last week levels as expectations are high that maturities of treasury bills (T-Bills) worth N147.49 billion will be fully offset by treasury bills auctions of the same figure this week.

Traders at Cowry Assets Management Limited said treasury bills worth N147.49 billion will mature via primary market, viz: 91-day bills worth N48.1 billion and 182-day bills worth N29 billion and 364-day bills worth N70.39 billion.

“It will be fully offset by treasury bills auctions worth N147.49 billion via primary market, viz: 91-day bills worth N48.1 billion and 182-day bills worth N29 billion and 364-day bills worth N70.39 billion. We expect their respective stop rates to remain relatively at current levels, or possibly moderate slightly due to increased interest in Government Notes occasioned by the improvement in fiscal balance. Also, sustained improvements in the foreign exchange reserves would tend to lower inflation risk.

Meanwhile, we also expect interbank lending rates to be pressured in the absence of major inflows,” the Lagos-based investment securities company said in a note to investors.

Similarly, traders are expectant that the Debt Management Office will issue Federal Government bonds worth N95 billion, viz: five-year, 14.50 per cent FGN JUL 2021 paper worth N35 billion, 10-year, 12.50 per cent FGN JAN 2026 bond worth N25 billion and 20-year, 12.40 per cent FGN MAR 2036 debt worth N35 billion.

At the over the counter market, “we expect decline in bond prices (and increase in yields) in the absence of any improvement in banking system liquidity,” the company stated.

Another dealer, Afrinvest West Africa Limited said the DMO’s Bond auction will be the last for the year 2016, adding that the trend witnessed in the previous five consecutive bond auctions in which instruments were under allotted on account of higher range of bids will likely persist at the December auction. Analysts believe that November 2016 Inflation report due for release this week will drive sentiment. They said investors will be looking to see the pace of M-o-M CPI growth in setting trading strategy for next year. We project a flattish M-o-M movement but still expect Inflation rate to accelerate on Y-o-Y basis due to low base effect.