The Central Bank is set to sell treasury bills this week its first for the month of March 2018. Stockbroking firm, Futureview Securities penned an analysis of the expected offer and we thought it will be useful for our visitors to read.
See below;
Issue on Offer/Summary
The Central Bank of Nigeria (CBN) is scheduled to hold a Treasury Bills (T-Bills) Primary Market Auction (PMA) on the 14th March, 2018. T-Bills worth N176.00 billion will mature on Thursday, 15th March; while an equal amount is expected to be issued on 91-day, 182-day and 364-day instruments. The CBN will be offering N6.00 billion, N30.00 billion and N140.00 billion on the 91-day, 182-day, and 364-day respectively.
Outlook on Yields
Yields have remained attractive to investors despite decline witnessed since the start of the year. Also, investors have continued to favour longer tenor instruments. From the last PMA held 28th February, the treasury bills market has been relatively flat with a sell bias due to consistent OMO auctions by the CBN leading to a drop in market liquidity. Over N1 trillion has been mopped up by the CBN between 28th February and 9th March; forcing system liquidity to close at N29.54 billion representing a decrease of 88.56% from the N258.13 billion printed on 28th February. Average T-Bills yield in the period inched up 0.28% to 14.16% as at 9th March 2018.
It is worthy to note that there is the likelihood of rates to drop in the medium/long term. As such, investors are advised to take advantage of the current relatively attractive yield and invest. In the month of January, year-on-year inflation dipped further to 15.13% marking the 12th straight decline since February 2017. This continued trend of declining inflation is likely to encourage a shift towards a more accommodative monetary stance and lower interest rates whenever the MPC reconvenes.
Consequently, we advise you take advantage of this auction to lock in higher rates in anticipation of a potentially declining yield environment.
See details of results of the Primary Market Auction (PMA) conducted by the CBN on 28th February 2018:
| Tenor (Days) | Rate |
| 91 | 11.85% |
| 182 | 13.4999% |
| 364 | 13.50% |
Our projections for rates at the next PMA scheduled for 14th March 2018.
| Tenor (Days) | Rate |
| 91 | 11.75%-12.00% |
| 182 | 13.00%-13.50% |
| 364 | 13.55%-13.70% |
Source: Futureview
