T-Bills auction, maturity of N117.2bn to have neutral effect on liquidity —Dealers

There are high expectations among dealers that  a Treasury Bills auction of N117.2 billion for all indicative tenors  will  neutral impact on liquidity balance given the scheduled maturity of the same amount dealers have said.

“However, an OMO maturity of N53.4 billion is expected to buoy liquidity levels while we expect the CBN to mop up via OMO sales,” dealers from Afrinvest suggested.

The Central Bank of Nigeria (CBN) is scheduled to hold a Treasury Bills (T-Bills) Primary Market Auction (PMA) on November 29, 2017.

T-bills worth N117.18 billion will mature in 91-day, 182-day, and 364-day instruments accordingly, while an equal sum is expected to be issued across the same tenors. The CBN is expected to auction N26.14 billion, N11.01 billion and N80.03 billion in the 91-day, 182-day, and 364-day instruments respectively.

According to Meristem Wealth Management Limited, the secondary market for treasury bills has been characterised by bearish sentiments since the last Primary Market Auction (PMA) on November 15, 2017. Sell pressures were witnessed on all instruments save for the 9-month (9M) instrument which recorded a yield decline of 0.29 per cent.

The 1M, 3M, 6M and 12M instruments witnessed yield increases of 1.10 per cent, 0.20 per cent, 0.15 per cent and 0.11 per cent respectively.

Consequently, the average Treasury bills yield for the period advanced by 0.26 per cent, to settle at 17.29 per cent on November 23, 2017.

In a note to investors, Meristem stated that, “Given the dearth of issuances of longer tenor instruments in OMO auctions, demand for the 364-day instrument has remained significant in recent Primary Market Auctions, although we note the decline in subscription levels over subsequent auctions.

“The 364-day instrument was oversubscribed by 1.30x at the last auction, while the bid to cover ratio on the 91-day and 182-day instruments were 1.01x and 1.00x respectively.”