The Treasury Bills (“T-Bills”) secondary market last week traded on bullish sentiments – Afrinvest

The Treasury Bills (“T-Bills”) secondary market last week traded on bullish sentiments as investors’ anticipation of OMO auctions fell flat as the Central Bank held-off in a bid to ease pressure on system illiquidity. As a result, average yield across tenors declined 0.6% W-o-W to 14.2% from 14.9%, particularly the April 2019 bills such as 04-Apr-19 (-4.3% W-o-W) and 18-Apr-19 (-5.1% W-o-W).

The Apex bank conducted only two Open Market Operations (“OMO”) auctions during the week to investors’ dismay. At the first auction which held on Monday, the Central Bank issued a no-sale result despite the 325.9% oversubscription to its total offer of N30.0bn (vs N127.8bn subscription) across the 101-, 178-, and 353-day tenors. This was to ease system liquidity on Monday (short N518.4bn). Interestingly, at the second intervention on Thursday, the CBN prorated its allotment – for the first time in months – on its long-term offer of N400.0bn with an allotment ratio of 0.8x due to the significant demand (bid-to-cover ratio of 1.8x) while the short and medium-term offers of N50.0bn and N100.0bn witnessed moderate demand, resulting in a bid-to-cover ratio of 0.2x and 0.5x respectively.

This week, a Primary Market Auction (“PMA”) is slated to hold on Wednesday where the CBN is expected to rollover a total of N115.1bn across the 91- (N23.4bn), 182- (N38.8bn) and 364-day (N59.9bn) tenors. Please see below our PMA expectations: