…the overnight (OVN) rate rose by 509bps w/w to 32.1%, as CBN’s debits for FX sales (c. N250.00 billion) outweighed inflows from FGN bond coupon disbursements (N28.49 billion).
FRI APRIL 18 2025-theGBJournal| The Treasury bills secondary market traded with mixed sentiments Thursday, as higher inflation numbers in March seemed to dampen hopes for a dovish monetary policy in the near term.
Market activities reflected renewed buy-interest from offshore investors, with onshore investors tilting toward a more cautious approach.
The average yield fell by 57bps to 24.3%. Across the market segments, the average yield declined by 15bps and 107bps to 20.9% and 28.2% in the NTB and OMO segments, respectively.
”Given our expectations for improved system liquidity next week, we anticipate an improvement in the demand for bills, causing yields to taper slightly,” Cordros Research said.
Additionally, the Central Bank of Nigeria (CBN) is scheduled to conduct an NTB PMA next Wednesday (23 April) with N400 billion worth of maturing bills on offer. Cordros expects rates to taper, albeit slightly, at the auction.
In the FGN bond secondary market bears feasted as the average yield rose by 13bps to 19.0%, attributed to selloffs from offshore players, particularly on the JAN-2026 bond.
Across the benchmark curve, the average yield increased at the short (+26bps) end, driven by selloffs of the JAN-2026 (+132bps) bond, while it decreased at the mid (-3bps) and long (-2bps) segments following demand for the FEB-2031 (-12bps) and JUN-2053 (-16bps) bonds, respectively.
Over the medium term, moderation in bond yields is anticipated, influenced by two factors – the anticipated dovish monetary policy stance and sustained improvement in demand and supply fundamentals in Q2-25.
Nonetheless, persistent inflationary pressure remains a downside to our expectations for a dovish tilt in monetary policy stance in the near term.
Meanwhile, the overnight (OVN) rate rose by 509bps w/w to 32.1%, as CBN’s debits for FX sales (c. N250.00 billion) outweighed inflows from FGN bond coupon disbursements (N28.49 billion).
The average system liquidity weakened consequently, settling at a net long position of N315.77 billion (vs a net long position of N425.33 billion in the previous week).
Next week, barring any liquidity tightening measures by the CBN, Cordros expects inflows from FGN bond coupon disbursements (N145.98 billion) to boost system liquidity, likely driving a moderation in the OVN rate.
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