The last Treasury Bills Auction of the Central Bank of Nigeria was oversubscribed. The apex bank recorded N146.53 billion during the auction. T-bills worth N34.38 billion was provided across the 91-day, 182-day and 364-day tenors at the primary auction.
The CBN had offered N4.38 billion for the 91-day tenor but recorded a total subscription of N15.06 billion, making it an oversubscription of N10.68 billion. However, the 182-day tenor didn’t perform better as the N10 billion offered was under-subscription by N1.41 billion, receiving a total subscription of N8.59billion.
Meanwhile, the highest subscription among the Treasury Bills was the 364-day tenor which reportedly experienced a total subscription of N122.88 billion. According to a report, the secondary-market bids was raised by Nigerian dealers for one-year treasury bills to 14% from 11% last week.
It was disclosed that due to the bid for bills at 16% by some investors on Friday, the bid doubled to 200 basis points. The report added that the T-Bills market resumed its bearish trend on Wednesday after the two-day Sallah break last week.
Sell-off period: It was learnt that global growth concerns forced foreign investors to sell continuously for three consecutive weeks. In response to the sentiment, average yield across the curve trended further northwards by 123 basis points week-on-week to settle at 13.9 per cent from 12.6 per cent the previous week.
While the short-term and long-term bills increased by 135bps and 97bps, respectively, the highest jump in yields was recorded by the mid-tenor bills which increased by 170bps.
It was also stated that a total of N150bn across the 85-day, 175-day and 364-day tenors on Thursday in an Open Market Operation auction. According to the activities that went down, the demand for the short and medium offers were not impressive as it received a bid-to-cover ratio of 0.3x and 0.1x, respectively, but the longest tenor experienced the highest demand with a bid-to-cover ratio of 1.1x.
Speaking on projections, Analysts at Afrinvest said, “We expect to see a moderation in the sell-offs by offshore investors, supported by increased issuance of OMO auction at more attractive rates.
“Consequently, we anticipate the customary mop-up exercise by the apex bank during the week as liquidity levels remain high along with the N208.6bn worth of T-Bills and OMO maturities expected to hit the financial system.”
Meanwhile, yields across the curve improved by 71bps week-on-week from 12.9% to 13.7%, with the 14-Feb-20 and 14-Mar-20 advancing the most by 196bps and 173bps, respectively.
It was stated that foreign investors will continue its cautious trading of the secondary market at the next bond auction which is scheduled for Wednesday.