DMO sold treasury bills valued at N457.20 billion in August- Report

The Debt Management Office (DMO) sold Treasury Bills (T.bills) valued at N457.20 billion across its auctions in August 2023.

This was contained in the FMDQ Markets Monthly Report for August seen by Nairametrics.

The amount represents 12.58% (N51.10 billion) Month on Month (MoM).

An increase in the value of T-bills sold across its auctions in July 2023 (N406.10 billion).

Similarly, the DMO sold FGN Bonds worth N230.26 billion in June 2023 via the reopening of two (2) 10Y, one (1) 15Y, and one (1) 30Y FGN Bond in August 2023.

The report noted that the total sale represented a 63.96% undersubscription of the amount offered1 and a 65.00% (N427.58 billion) MoM decrease on the amount sold in July 2023 (N657.84 billion) for the same FGN Bond maturities.

FMDQ noted that in August 2023, the CBN sold OMO Bills worth N150.00 billion in its first public OMO Bills auctions in 2023, signaling a potential end to its consecutive seven months no auctions trend.

Corporate bonds:

According to the report, in August 2023, corporate bonds worth N46.00 billion were listed on the FMDQ Exchange, compared to July 2023 when there were no corporate bond listings.

• “As a result, the total outstanding value for corporate bonds increased MoM by 0.07% (N1.20 billion) to N1,795.15 billion in the review month,” it said.
• Commercial Papers: The report stated that the total value of CPs quoted on the FMDQ Exchange in August 2023 was N239.04 billion, representing a MoM increase of 103.75% (N121.72 billion) from the value of CPs quoted in July 2023.
• “Quoted CPs were issued by institutions from various sectors including Financial Services (5), Manufacturing (5), Agriculture (5), Commodities Trading (3), Real Estate (3), Retail (3), Oil & Gas (2), and Transportation (2). 
• As a result, the total outstanding value of CPs increased MoM by 8.50% (N80.72 billion) to N1,029.98 billion,” it said.

Secondary market turnover:

According to the report, secondary market turnover on the FMDQ Exchange in August 2023 was N17.68 trillion, representing a MoM decrease of 11.24% (2.24 trillion) and a YoY increase of 13.84% (N2.15 trillion) from July 2023 and August 2022 figures, respectively.

Foreign Exchange (FX), Money Market (MM), and CBN Bills transactions dominated secondary market activity, accounting for 80.99% of the total secondary market turnover in August 2023.

Total spot market turnover for all products traded in the secondary market was N16.54 trillion in August 2023, representing a MoM decrease of 10.45% (N1.93 trillion) from the July 2023 figures.

• “The MoM decrease in total spot market turnover was jointly driven by a decline in turnover across all spot market products, with contributions by FX, MM, and FI transactions decreasing MoM by 7.64% (N0.28 trillion), 5.36% (N0.34 trillion) and 15.56% (N1.31 trillion), respectively. 
• The decline in MM turnover was majorly driven by a decrease in Repos/Buy-backs, offsetting the MoM improvement in Unsecured Placement/Takings transactions. Likewise, the downtrend in FI turnover was driven by a MoM decrease across all FI products, excluding CBN Special Bills which increased in the review period,” the report noted.

According to the report, Spot FX market turnover was $4.37 billion (N3.34 trillion) in August 2023, representing a MoM decrease of 6.13% ($0.29 billion) from the turnover recorded in July 2023 ($4.66bn).

• “In the FX Market, the US Dollar depreciated against the Naira, with the spot exchange rate ($/N) decreasing by 0.84% ($/N6.46) to close at an average of $/N763.04 in August 2023 from $/N769.51 recorded in July 2023. 
• Further, exchange rate volatility decreased in August 2023 as the Naira traded within an exchange rate range of $/N738.18 – $/N789.08 compared to $/N740.08 – $/N803.90 recorded in July 2023,” the report said.

Fixed Income:

The report stated that the Fixed Income (FI) market turnover was N7.12 trillion in August 2023, representing a MoM decrease of 15.54% (N1.31 trillion) from the turnover recorded in July 2023 (N8.43 trillion).

MoM decrease in the FI market turnover was driven by the 33.69% (N0.92 trillion), 4.99% (N0.12 trillion), 36.79% (N0.89 trillion) and 36.09% (N0.01 trillion) decline in turnover across T.Bills, OMO Bills, FGN Bonds and Other Bonds, offsetting the 85.08% (N0.63 trillion) MoM uptick in CBN Special Bills transactions, respectively.

As a result, the trading intensity (TI) for T.Bills and FGN Bonds decreased MoM by 0.20 and 0.05 to 0.39 and 0.08, respectively.

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