Investors eye tomorrow's T-Bill auction   

Dec 5 (Lagos) - Fixed income investors are eyeing what will be the final Nigerian Treasury bills Primary market auction of the year. 2 weeks ago, the discount rate in the one year treasury bill remained flat at 16.75% although demand of N 1.2 trillion outpaced the allotment of N 520 billion (Pictured). We would expect that demand to return to the auction tomorrow. 

Two weeks ago, many expected the discount rate to exceed 18% resulting in annual yields north of 21% but they were disappointed when the rate was held flat compared with the 1 month ago auction. 

Since then the stock market has been moving up slowly and cautiously as investors weigh the returns between the two. The fixed income market is huge compared to the stock market in Nigeria like other Countries so it is normal what happens in the bonds market always has a huge impact on equity market. 

That 16.75% annual discount rate that some were able to achieve at the previous auction means that the annual yield is almost 20% on those bills. That is a great return based on the fact that it is risk free return and also a tax free investment. Analysts would be expecting that high interest in the treasury bills to continue because of the huge volumes involved. 

Plus the stock market has been on an absolute tear this year outpacing all expectations in a high inflation, low productivity environment. Some would expect that momentum to slow down in the short term to get a breather while others still expect the party to continue without a pause. Some of the best performing stocks this year have been CWG , TRANSCORP , TRANSCORPHOT , SEPLAT , OANDO , FBNH , MRS , CONOIL while some obscure micro cap names have gained multifold as well. 

reporting for on Tuesday, Dec 5 2023 from Lagos, Nigeria

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