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Robust System Liquidity to Drive Buying Interest as PMA holds on Wednesday

Proshare

Monday, February 26, 2018 / 11:21 AM / Afrinvest Research 

The Treasury Bills (“
T-Bills”) market witnessed a bullish performance for the first time in over a month as average rate across tenors declined W-o-W by 30bps to settle at 14.2% last week. The performance was largely driven by buying interest in short and medium-term T-Bills as well as reduced frequency of OMO auctions by the CBN.

Please see below indicative rates for today:
 

Maturity

Offer Rate (%)

Tenor

12-Apr-18

12.00

45

14-Jun-18

12.50

108

05-Jul-18

12.70

129

30-Aug-18

13.20

185

04-Oct-18

13.40

220

OMO Auction

12.00

90 to 180 days

OMO Auction

13.50

180 to 300 days

Rates are valid till 1:30pm today (26-Feb-2018)

This week, Primary market and OMO issuances of N260.0bn and N109.4bn respectively is expected to hit the system. However, the CBN has a PMA scheduled this Wednesday offering N260.0bn (details below).
 

Tenor (days)

Offer (N’bn)

Last Stop Rate (%)

91

7.9

11.95

182

30.0

13.65

364

222.1

13.70

 
Moreover, anticipated inflows from FAAC payments and retail FX refunds would also bolster liquidity. Against this backdrop, we expect an increase in the frequency of OMO mops up this week as we anticipate sustained buying interest due to robust system liquidity. Hence, we expect T-Bills rates to trend lower this week.

To invest in T-Bills, kindly send an email to brokerageteam@afrinvest.com 

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