The Debt Management Office (DMO) has announced plans to re-issue N230 billion worth of Nigerian Treasury Bills (NTBs) at the next primary market auction scheduled for Wednesday, August 20, as the federal government seeks to refinance maturing debt obligations. The move comes at a time when yields in the fixed income market are rising, reflecting tightening liquidity and weak demand for short-term securities.
Trading activity in the secondary Treasury bills market remained muted last week, with the average yield across all tenors inching up by 1 basis point to 21.4%. Specifically, the NTB segment recorded a 4bps increase to 18.0%, while the Open Market Operations (OMO) segment saw yields decline slightly by 2bps to 24.6%. Analysts say this upward trend signals cautious investor sentiment amid current market conditions.
Financial experts expect liquidity to improve in the coming days, supported by expected Federation Account Allocation Committee (FAAC) disbursements and inflows from maturing instruments. This development could strengthen demand for NTBs at the upcoming auction and potentially lead to a moderation in stop rates, particularly for mid- and long-tenor bills. A fixed income trader at a Tier-1 bank noted that easing liquidity “could revive appetite for short-term government securities.”
At the last NTB auction on August 6, the DMO also raised N230 billion, offering N1.5 billion, N3.0 billion, and N225.5 billion across the 91-, 182-, and 364-day maturities. Stop rates cleared at 16.24%, 17.00%, and 19.89% respectively. Market watchers anticipate that this week’s auction could see stronger bidding interest, especially for the 364-day paper, which traditionally attracts the bulk of institutional demand from pension funds and asset managers.
Despite the Central Bank of Nigeria’s tight monetary policy to curb inflation and stabilize the naira, analysts believe the current high-yield environment presents opportunities for investors seeking to hedge against inflation and currency risks. The outcome of this NTB auction will be closely monitored as a key barometer of short-term borrowing costs and investor sentiment heading into the final quarter of the year.
Source:The sun