The Debt Management Office (DMO) is scheduled to re-issue N230 billion worth of Nigerian Treasury Bills (NTBs) at the next primary market auction tomorrow, August 20, as the Federal Government is strategizing to refinance its maturing obligations amid shifting yield dynamics in the fixed income market.
The DMO’s move is coming as the secondary market for Treasury bills closed bearish last week, reflecting dwindling investor appetite for the debt instruments.
At the close of trading on Friday, the average yield across all tenors marginally increased by 1 basis point (bp) week-on-week (w/w) to 21.4 per cent.
Specifically, the NTB segment inched up by 4bps in average yield to 18.0 per cent, while the yields in the Open Market Operations (OMO) segment dipped by 2bps to 24.6 per cent.
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Investment experts attribute the recent upward movement in NTB yields reflects weak demand to tighter liquidity conditions.
Despite the unimpressive performance, they projected that the system liquidity would improve in the coming days due to expected FAAC disbursements to the tiers of government and potential inflows from maturing instruments, which could revive investor appetite for short-term government securities.
Available data on the last NTB auction held on August 6 indicated that the DMO raised N230 billion as well, offering N1.5 billion, N3.0 billion, and N225.5 billion across the 91-day, 182-day, and 364-day tenors respectively while the stop rates cleared at 16.24 per cent, 17.00 per cent, and 19.89 per cent for the respective maturities.
Based on current market variables, investors foresee a slight drop in stop rates at this week’s TB auction, especially for the 364-day tenor, which usually is more appealing to investors due to its returns.
