According to a review of the main market auction sheets, the Central Bank of Nigeria (CBN) held three rounds of auctions for Nigerian Treasury Bills (NTBs) in September, totaling N532.5 billion.
The breakdown revealed an offer of N203.2 billion for just the 364-day instrument in the first, N152.2 billion for all three tenors in the second, and N177.1 billion for the third.
With a bid-to-cover ratio of 4.2 times, investors’ appetite was solid for the month, although it lagged behind August’s demand of 5.4 times.
Notably, the 182-day instrument had the most buy demand, with sales of N2.5 billion and a bid-to-cover ratio of 4.3 times. Following sales for N527.1 billion and 91-day instruments, the bid-to-cover ratio was 4.3 times for the former and 2.9 times for the latter.
The stop rate on the 91-day and 364-day instruments decreased to 5% and 11.4 % from 5% and 14 %, respectively, during the final auction in September, while the stop rate on the 182-day instrument increased to 6.6 % from 5.9 %.
The average yield on secondary T-bills increased 51 basis points month over month to 8.3%, mostly due to selling pressure on the 364-day bill (yield: +135bps), the 182-day (yield: +58bps), and the 92-day (+40bps) instruments.
Analysts anticipate that system liquidity will be strong in October as traders exercise caution and investors cherry-pick instruments on the secondary market.
The Debt Management Office (DMO) resumed the issue of FGN Apr 2029, Jun 2033, Jun 2038, and Jun 2053 bond instruments this month in the primary market. A total of N360.0 billion was raised, with N90 billion going to each of the designated tenors.
With the exception of the 2053 instrument, which witnessed a bid-to-cover ratio of 2.3 times, demand was muted for all tenors, while the bid-to-cover ratio was underwhelming at 0.8 at certain times.
The stop rates for these tenors therefore increased from the previous auction in August, where they were correspondingly 13.8 percent, 15 percent, 15.2 percent, and 15.85 percent. They are now 14.5%, 15.45 percent, 15.55 percent, and 16.25 percent.
In the secondary market, the yield across all terms increased by 146bps, 122bps, and 58bps m/m, bringing the secondary market, the yield across all terms increased by 146bps, 122bps, and 58bps m/m, bringing the average yield up to 13.8% on a monthly basis.ng the average yield up to 13.8% on a monthly basis.