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Short to Medium Term Instruments Remain Attractive

Proshare

Monday, September 25, 2017/11:30 AM/ Afrinvest

Last week, investors’ interest (foreign and domestic) in T-Bills instruments was sustained both in the primary and secondary markets. As a result, average T-Bills rates declined across tenor – down 134bps M-o-M. It is noteworthy to emphasize that the demand for long dated bills spiked significantly since the CBN stopped offering instrument above 300 days at its OMO auctions.

Consequently, we have observed a bull flattening pattern (i.e. longer-term rates falling faster than shorter ones) at primary and secondary market for T-Bills as investors aggressively position in long dated bills. At the PMA last week, the 364-day stop rate fell to 17.0%, 152bps lower than the August 30th Auction stop rate (18.52%).

Please see below today’s indicative rates and tenors:

Maturity

Tenor (Days)

Rate (%) p.a.

23-Nov-17

59

15.80

04-Jan-18

101

16.00

01-Feb-18

129

16.70

19-Apr-18

207

16.30

05-Jul-18

283

15.00

02-Aug-18

311

15.00

OMO Auction

100 to 200 days

17.10

Kindly note that rates are valid for today 25-Sep-2017

Please see the result of the PMA held last week Wednesday below:

Tenor

Subscription

Allotment

Last Stop  Rate

Stop Rate

91 days

N 23.27bn

N22.78bn

13.2500%

13.1500%

182 days

N33.19bn

N24.74bn

17.3610%

16.8000%

364 days

N502.89bn

N168.36bn

17.7500%

17.0000%


This week, there will be maturing T-Bills worth N123.5bn. On the back of continued interest in long term instruments, we anticipate rates to moderate lower towards the end of the week while short to medium term rates remain attractive. 



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