NTB primary auction review – Stop rates on 364-day bill down by 1bps

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Yesterday, the Central Bank of Nigeria held an NTB primary auction rolling over N93.1bn worth of maturing treasury bills. Investors’ appetite at the auction remained strong, as the 91-day, 182-day and 364-day bills were oversubscribed by 1.4x, 1.5x and 3.9x, respectively.

Stop rates for the 91-day and 182-day bills remained unchanged at 2.5%, 3.5%, respectively. However, rates on the longer tenor paper dipped by a marginal 1bp to close at 9.64% closing in line with our expectations.

The CBN continues to send the signal to the debt markets again that the rate reversal party may be coming to a pause. Interestingly, the CBN sold 1.9x (N179.3bn sold vs N93.1bn offered) of what it initially offered, taking advantage of the huge bids from investors at the auction.

NTB primary auction
Source: CBN, United Capital Research

Regarding the NTB secondary market, yesterday’s auction coupled with the outcome of the most recent MPC meeting posits that the upward yield reversal in the NTB market has plateaued. In subsequent trading sessions, we expect to observe some buy interest in the secondary NTB market as leftover demand gets filled. We also think yesterday’s auction sets a cue for the OMO auction expected later in the week.

Read Also:  Insider Dealing: Sterling Bank Sells 18.457M Shares
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Lastly, regarding the equity market, we also believe the recent halt in the yield environment in the primary market coupled with potential dividend plays before the H1 earnings season could provide some temporary respite for the tight market thus

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