WeekAhead-Treasury Bills: T-bills worth N92.31 billion seen mature via OMO on FAAC disbursements

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In the just concluded week, the apex bank sold treasury bills worth N34.38 billion via the Primary Market.

Given investors’ demand for positive real returns on investment, we saw stop rates for the 182-day and 364-day tenure buckets increase to 11.35% (from 10.60%) and 12.00% (from 11.18%) respectively in line with our expectation; however, 91-day T-bills moderated to 9.70% (from 9.75%) as investors avoid reinvestment risk.

CBN also sold N88.66 billion in the secondary market in order to mop up liquidity; hence, the total outflows worth 123.04 billion offset the inflows from the matured T-bills worth N83.42 billion.

Consequently, NIBOR for overnight funds, 1 month, 3 months and 6 months tenure buckets increased to 17.69% (from 12.44%), 14.75% (from 13.15%), 13.81% (from 12.95%) and 15.41% (from 13.73%) respectively.

Elsewhere, NITTY rose across maturities tracked on persitent sell-offs, especially by FPIs – as yields on 1 month, 3 months, 6 months and 12 months maturities further rose to 13.76% (from 12.22%), 12.08% (from 11.55%), 14.27% (from 12.76%) and 13.78% (from 13.23%) respectively.

In the new week, T-bills worth N92.31 billion will mature via OMO which, in addition to anticpated FAAC disbursements, would result in ease in financial system liquidity.

Hence, we expect interbank interest rates to moderate despite upcoming bond auctions.

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