364-day treasury bill at 0.15% yield: How low can it get?

Must Read

- Advertisement -

Recently, the CBN conducted a primary market auction, with N150.6bn worth of treasury bills on offer across the 91-, 182- and 364- Day tenor. Stop rates trended lower as the 91-day, 180-day and 364-day papers closed at 0.02% (previously 0.035%), 0.19% (previously 0.15%) and 0.15% (previously 0.30%), in that order. Nevertheless, demand was high, with the three tenors being oversubscribed 2.8x, 2.9x, and 3.0x, respectively, compared with 5.1x, 2.3x and 3.8x at the last auction.

364-day treasury bill at 0.15% yield: How low can it get?
364-day treasury bill at 0.15% yield: How low can it get? – www.brandspurng.com

For context, the 364-day paper, at 0.15% yield, implies that a N1.0m investment in treasury bills will yield a meagre return of N1,500 in a year, ridiculously low compared an equal investment in the more-risky equity market, which currently has an average dividend yield of 5.4%, implying a N54,000 return on the same N1.0m Investment without taking into account capital gains (or loss). Notably, fundamentally sound stocks yield considerably higher dividends than the average; for instance, ZENITH’s forecast dividend yield is estimated at 11.5%, implying a return of N115,000, bar capital gains.

Taking a cue from the market’s reaction to the last NTB auction, we expect sustained bullish bias for equities in the coming weeks, albeit alongside profit-taking. The MPC’s recent decision to hold the benchmark interest rate also supports demand for equities market. Also, Bond markets have been mildly bullish with slight buying interest observed on the short end of the yield curve, pulling the average bond yield is down 1bps from Friday. We expect bond yields to be depressed further in the coming week.

- Advertisement -
spot_imgspot_img

Subscribe to BrandSpur Ng

Subscribe for latest updates. Signup to best of brands and business news, informed analysis and opinions among others that can propel you, your business or brand to greater heights.

- Advertisement -

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Latest News

TD Africa

TD Africa Marks 22 Years Of Leadership In Tech Distribution Ecosystem

TD Africa, Sub-Saharan Africa’s biggest technology and lifestyle distribution company, clocks 22 on Saturday, May 15, 2021. To mark its 22 years of sterling leadership...
- Advertisement -
spot_imgspot_img

Latest News

TD Africa Marks 22 Years Of Leadership In Tech Distribution Ecosystem

TD Africa, Sub-Saharan Africa’s biggest technology and lifestyle distribution company, clocks 22 on Saturday, May 15, 2021. To mark its...
- Advertisement -
BrandsPur Weekly Cartoons
- Advertisement -spot_imgspot_img