Average T-Bills Yield Contracts Marginally to 13.4% as CBN Resumes OMO Auctions; T-Bills and FGN Bonds Indicative Rate

The Treasury Bills (“ T-Bills ”) secondary market started the second quarter of 2019 on a bullish note largely buoyed by increased system liquidity from FAAC injection on the Friday of the previous week. However, the Central Bank of Nigeria (“CBN”) resumed its aggressive liquidity mop-ups through OMO auctions after a surprise one-week break. Notwithstanding, average yields across all tenors shed marginally by 2bps W-o-W to settle at 13.4% from 13.6% the previous week.

Demand was witnessed largely on the short- and medium-term bills causing yields to tank by 60bps and 20bps W-o-W respectively while the long-term bills advanced 11bps W-o-W as sell-offs were experienced on the 02-JAN-20 (+0.4%) and 23-JAN-20 (+0.2%) bills.

Last week, the Apex bank also offered a total of N350.0bn in two OMO auctions. At the first auction on Tuesday, N200.0bn was offered across the 86-,153- and 364-Day bills while on Thursday, N150.0bn was offered across the 203- and 364-Day bills. Investors exhibited preference for longer tenor OMO instruments which recorded (2.1x) over-subscription while the short and medium term were under subscribed by (0.6x) and (0.1x) respectively.

In addition, the CBN offered N95.7bn worth of bills across 91-, 182- and 364-Day tenors  at the Primary Market Auction (“PMA”) on Wednesday with a total bid-to-cover ratio of 2.1x and stop rates inching 40bps and 51bps on medium- and long-term bills in tandem with the secondary market levels. Also, the bills were all oversubscribed, however, only the long-term bill was fully allotted while the 91-Day and 182-Day bills received 0.5x and 0.8x allotment, respectively.

Please see a detailed summary in the table below: