THERE are expectations that the stop rates of 364-day bonds will rise amid an expected strain in financial system liquidity as the Central Bank of Nigeria (CBN) rolls over maturing Treasury-bills worth N303.22 billion.
The bills would be via the primary and secondary markets; viz: 91-day bills worth N9.96 billion, 182-day bills worth N10.21 billion and 364-day bills worth N283.04 billion.
Meanwhile, there are rising concerns over Nigeria’s foreign reserves and a rapid naira depreciation which have skewered the August Bond Market Auction.
Demand slumped to N312.56 billion, the lowest in the year and below the N360 billion worth of bonds offered.
Analysts suspect the non-responsiveness of the stop rates to rate hikes mildly contributed to investors’ disinterest. The Debt Management Office (DMO) sold N227.7 billion cumulatively with a spread of N10.43 billion for 2029 paper, N4.07 billion for 2033, N25.53 billion for 2038 and N187.73 billion for 2053.
Dealers said the attraction to the longest tenor (2053) suggests investors expect higher inflation in the interim.
The stop rates settled at 13.85 percent, 15.00 percent, 15.20 percent and 15.85 percent for 2029, 2033, 2038 and 2053 tenors, respectively, higher than 12.50 percent, 13.60 percent, 14.10 percent and 14.30 percent recorded in July.
The FGN savings bond allotment rose to N1.478 billion in August, the highest in 2023, despite the reduced coupon rate compared to previous months.
The two-year tenor had N421.76 million while the three-year had N1.057 billion. Compared to the July auction, the successful subscription grew to 652 in August from 490, showing a significant improvement in investors’ appetite towards the instrument.
Analysts believe the robust system liquidity supported the huge subscription
