Low demand to hit T-Bills market as FX reserves decline $59m

With bearish sentiments dominating the Treasury bills (T-bills) secondary market amidst buoyant liquidity in the system, analysts have said they expect low demand for T-bills and a slight expansion in yields from current levels this week.

This is even as Nigeria’s FX reserves sustained its descent for the 5th consecutive week, its lowest level since October 8, 2021. Specifically, Nigeria’s reserves declined by $58.90 million week-on-week (w-o-w) to $38.48 billion.

Assessing the performance of the T-bills market, analysts at Cordros Research attributed the performance to market participants selling off their positions amid scarce bids for the available offers.

The had argued that average yield across all instruments expanded by 10 basis points (bps) to 4.1 per cent, while across segments, average yield expanded by 13bps to 4.0 per cent at the NTB segment but was flat at 4.4 per cent at the OMO segment.

“Last week’s OMO auction, the CBN offered and allotted N40.00 billion worth of bills to market participants and maintained stop rates across the three tenors, as with previous auctions.

Following the relatively lower inflows expected in the system next week, we expect low demand for T-bills and a slight expansion in yields from current levels. Also, we expect market focus to be shifted to the NTB PMA holding on Wednesday (8th June), with the CBN expected to roll over N167.22 billion worth of instruments”, they said.

Meanwhile, the Naira, across the FX windows fell by 0.1 per cent to N419.75/$1 at the I&E window (IEW) but appreciated by 0.7 per cent to N606.00/$1 at the parallel market. However, at the I&E window, total turnover (as of 2nd June 2022) increased by 115.3 per cent WTD to $1.15 billion, with trades consummated within the N410.00 – N453.55/$ band.