Bear­ish sen­ti­ment resur­faces in se­condary T-bills mar­ket de­spite sta­ble oil prices

An­a­lysts ex­pect mixed sen­ti­ments in do­mes­tic mar­ket

Business a.m. - - FINANCE & INVESTMENT - Charles Abuede

IN THE SEC ONDARY T BILLS MAR­KET, bear­ish mo­men­tum resur­faced as av­er­age yield closed higher by 6 ba­sis points week on the week to 2.0%. While the yield at the longer end was flat at 2.9 per cent, the short-term in­stru­ment recorded a mild gain as yield mod­er­ated 1 ba­sis point week on week to 1.2%.

On the other hand, there were sell-offs in the medium term in­stru­ment with av­er­age yield climb­ing 18 ba­sis points week on week to 2.0%.

The open buy-back (OBB) and overnight (OVN) rates opened the week higher at 13.3% and 14.3% re­spec­tively, although sys­tem liq­uid­ity rose slightly to N778.0 bil­lion (vs. 769.2 bil­lion as at July end­ing). How­ever, both the OBB and OVN rates de­clined to 8.5 per­cent and 9.3 per­cent re­spec­tively on Wed­nes­day while sys­tem liq­uid­ity plunged to 195.8 bil­lion. At the close of the week, the OBB and OVN rates came in at 6.3 per­cent and 7.2 per­cent re­spec­tively with sys­tem liq­uid­ity set­tling at 220.7 bil­lion.

As a re­sult of the tight sys­tem liq­uid­ity to­wards the end of the week, the CBN did not con­duct any auc­tion last week. How­ever, given the apex bank’s man­age­ment of sys­tem liq­uid­ity, an­a­lysts ex­pect money mar­ket rates to trade at a sim­i­lar range in the com­ing week de­spite ma­tur­ing Tbills and OMO in­stru­ments worth 56.7 bil­lion and

89.0 mil­lion re­spec­tively.

Bond mar­ket bulls take 40 winks

Fol­low­ing suc­ces­sive weeks of stel­lar de­mand, profit-tak­ing in the se­condary mar­ket forced trad­ing to close the week bear­ish. As a re­sult, av­er­age yield spiked 73 ba­sis points week on week to 7.6 per­cent fol­low­ing sell-offs on 4 of 5 trad­ing ses­sions. Across tenors, the long-term notes recorded the most sell pres­sures with yields ris­ing 112 ba­sis points week on week. Sim­i­larly, the mid and short-term in­stru­ments recorded 82 ba­sis

points and 11 ba­sis points rise in yields re­spec­tively. At the sub-Sa­ha­ran Africa (SSA) Eurobond mar­ket, in­vestors con­tin­ued to cherry-pick at­trac­tive in­stru­ments as av­er­age yields de­clined 11 ba­sis points week on week to set­tle at 8.5 per­cent. The NIGE­RIA 2025 and 2031 in­stru­ments en­joyed the high­est de­mand, shed­ding 39 ba­sis points and 38 ba­sis points week on week re­spec­tively.

Sim­i­larly, the GHANA 2030 and lVORY COAST 2031 in­stru­ments recorded gains as yields fell by 22bps and 14bps re­spec­tively. Con­versely, yields on the ZAM­BIA 2022 rose by 11 ba­sis points week on week to lead the losers while the KENYA 2028 and 2048 in­stru­ments trailed with 4bps week on week in­crease apiece.

For the African Cor­po­rate Eurobonds, the bullish streak per­sisted as av­er­age yields de­clined by 9 ba­sis points week on week to close at 5.0 per­cent. The UNITED BANK OF AFRICA 2022 and NEERG EN­ERGY 2022 in­stru­ments were the best per­form­ers as their re­spec­tive yields fell 39bps and 22bps. On the flip side, the ESKOM HOLD­ING 2023 and 2025 bonds led lag­gards with yields ex­pand­ing 147bps and 16bps week on week in that or­der.

Ver­dict: Mar­ket an­a­lysts at Afrin­vest Re­search ex­pect sen­ti­ments in the do­mes­tic mar­ket to be mixed in this. How­ever, the sus­tained de­mand in the Eurobond mar­ket is highly an­tic­i­pated as global oil prices re­main sta­ble.

L-R: Mati­nat Ajeigbe, an­a­lyst, Phillips Con­sult­ing Lim­ited (PCL); Richard Edet, se­nior An­a­lyst; Rob Taiwo, man­ag­ing di­rec­tor; Nwaji Ji­bunoh, se­nior man­ag­ing con­sul­tant; Ibrahim Ade­laja, an­a­lyst, and Joan Azubuike, as­sis­tant con­sul­tant, dur­ing the launch of Mi­cro-Cour­ses to Fuel the fu­ture of work in Nige­ria by PCL, in La­gos, re­cently

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