Short to Medium Term Instruments Remain Attractive


September 25, 2017/Afrinvest

Last week, investors’ interest (foreign and domestic) in T-Bills instruments was sustained both in the primary and secondary markets. As a result, average T-Bills rates declined across tenor – down 134bps M-o-M. It is noteworthy to emphasize that the demand for long dated bills spiked significantly since the CBN stopped offering instrument above 300 days at its OMO auctions.

Consequently, we have observed a bull flattening pattern (i.e. longer-term rates falling faster than shorter ones) at primary and secondary market for T-Bills as investors aggressively position in long dated bills. At the PMA last week, the 364-day stop rate fell to 17.0%, 152bps lower than the August 30th Auction stop rate (18.52%).

Please see below today’s indicative rates and tenors:

Maturity Tenor (Days) Rate (%) p.a.
23-Nov-17 59 15.80
04-Jan-18 101 16.00
01-Feb-18 129 16.70
19-Apr-18 207 16.30
05-Jul-18 283 15.00
02-Aug-18 311 15.00
OMO Auction 100 to 200 days 17.10

Kindly note that rates are valid for today 25-Sep-2017

Please see the result of the PMA held last week Wednesday below:

Tenor Subscription Allotment Last Stop  Rate Stop Rate
91 days N 23.27bn N22.78bn 13.2500% 13.1500%
182 days N33.19bn N24.74bn 17.3610% 16.8000%
364 days N502.89bn N168.36bn 17.7500% 17.0000%

This week, there will be maturing T-Bills worth N123.5bn. On the back of continued interest in long term instruments, we anticipate rates to moderate lower towards the end of the week while short to medium term rates remain attractive.