Investors record $389mln oversubscription in fixed income market

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Investors seeking safe haven has recorded N617. 130 billion in the fixed income market as expectations are high that demand will persist with improved system liquidity.

The Debt Management Office (DMO) offered N409.98 billion and had a total subscription of N1,027.11 billion.

The oversubscription was skewed towards 364-day paper, while 91-day and 182-day had an undersubscription.

The DMO eventually sold N291.03 billion, 29 percent lower than the amount offered of N409.98 billion.

Compared to the previous auction, the stop rates declined across all tenors at 18.20 percent, 19.20 percent, and 20.90 percent, respectively.

Meanwhile, the average yield on Nigerian Treasury bills receded below 23 percent due to increased demand for naira assets in the secondary market from 23.10 percent after the primary market auction on Wednesday. According to fixed income analysts, the latest rally in the Treasury bills market was spurred by unmet bids at the primary market auction conducted during the week.

Fund, asset managers move to fill gaps in their respective portfolios, causing yields to swing, with the average yield contracting by 20 basis points to 22.8 percent on Thursday in the secondary market.

Across the curve, the average yield declined at the short (-17 bps), mid (-28 bps), and long (-16 bps) segments in the market, according to Cordros Capital Limited.

The Nigerian Treasury bills yield decline was attributed to buying interest on the 91-day to maturity bills, whose yield declined by -112 bps.

As a result of market demand for 105-day-to-maturity bills, its yield curve sloped downward by -89 bps, while buying interest on 196-day-to-maturity bills dragged its yield lower by 84 bps.

Similarly, the average yield dipped by 45 basis points (bps) to 25.3 percent in the Open Market Operation (OMO) bills segment in the secondary market due to increasing demand after failed primary market auctions attempted last month.

The Central Bank of Nigeria (CBN) held a Treasury Bills (T-Bills) Primary Market Auction (PMA) on the 21st of August, 2024. At the PMA, existing Treasury Bills totalling N409.98 billion across standard maturities were offered to investors for subscription.

The amount was split into three maturities across the 91-day (N60.69 billion), 182-day (N66.25 billion), and 364-day (N283.04 billion) maturities that matured and were rolled over.