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Buying Interest to Sustain Bullish Trend Ahead of PMA

Proshare

Monday, April 30, 2018 /12:58 PM/Afrinvest

The Treasury bills (“T-Bills”) market continued its bullish trend as average yield across tenors fell 1.5% W-o-W to close at 11.3% last week. The medium-term instruments declined the most down 96bps W-o-W as average offer rates closed 10.8%.


Also, the CBN bucked the 4-week trend of “once in a week” OMO auction announcement last week by conducting an OMO auction twice (Thursday and Friday).

As expected, the long tenor instrument at 244 days on Friday was approximately 10.9x oversubscribed with N40.0bn on offer receiving subscription of N435.1bn with the CBN allotting just N22.1bn (5.1% of subscription). Also, the OMO auction on Thursday (245 days) was oversubscribed by 3.2x with N190.0bn on offer receiving subscription of N602.1bn while N115.7bn was sold representing 19.2% of subscription.

Please see below indicative rates for today:

Maturity

Tenor (Days)

Rate (%) p.a.

21-Jun-18

52

7.50

23-Aug-18

115

8.70

06-Sep-18

129

9.30

25-Oct-18

178

9.50

13-Dec-18

227

10.30

17-Jan-19

262

9.60

OMO Auction

180 - 300

11.00

Rates are valid till 1:30pm on 30-Apr-18


Going into the week, we expect the bullish trend to continue ahead of the T-Bills Primary Market Auction (“PMA”) on Wednesday where we see rates on the 364-day instrument moderating further on the back of sustained demand.

Please see details below:

TENOR

91-Day

182-Day

364-Day

AMOUNT

N9.5bn

N47.7bn

N38.2bn

PREVIOUS STOP RATE

10.90%

12.00%

12.08%

 
Also, maturing T-Bills worth N190.7bn will be hitting the system with just N95.4bn being rolled over representing 50.0% of the maturing bills. Consequently, we expect a further moderation in rates this week due to increasing buying interest as well as high system liquidity (N306.3bn positive on Friday). This would also serve as a drag on the direction of rates this week.

Bonds Market Update

In the same vein, the Bond Market closed on a marginally bullish note down 3bps on Fridaydue to slight buying pressure on the shorter end of the curve as average yield close 12.4% W-o-W.

Please see below rates for today:

Bond

Years

 Offer (%)

Feb-20

2

 11.85

Jul-21

3

 12.52

Jan-22

4

 12.57

Mar-24

6

 12.76

Jan-26

8

 12.89

Mar-27

9

 12.90

Jul-34

16

 12.92

Mar-36

18

 12.69

Apr-37

19

 12.88

Rates are valid till 1:30pm on 30-Apr-18


*Please note minimum subscription for bonds is N20m.


Proshare Nigeria Pvt. Ltd.

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