SAT 01 JAN, 2022-theGBJournal– The overnight (OVN) rate contracted by 200bps w/w to 10.5%, following inflows from OMO maturities (N60.00 billion) which offset funding pressures for Central Bank of Nigeria’s (CBN) weekly FX auction.
In the first week of the new year, we envisage the OVN rate would remain elevated in the double-digit region as expected debits for CRR and CBN’s weekly auctions inflows are likely to outweigh expected inflows from OMO maturities (NGN50.00 billion)
Proceedings in the Treasury bills secondary market traded ended the week on a mixed note as the average yield was unchanged at 4.8%. Across the market segments, the average yield at the OMO segment expanded by 6bps to 5.5%.
Elsewhere, the average yield at the NTB segment settled lower by 1bp to 4.4%. At Wednesday’s NTB PMA, the CBN offered N52.31 billion worth of instruments for sale to market participants and demand at this auction was strong with a subscription level of NGN82.25 billion (Bid-offer ratio: 1.6).
Eventually, the CBN allotted NGN52.76 billion – N2.49 billion of the 91D, N2.16 billion of the 182D and N48.11 billion of the 364D bills with respective stop rates of 2.49% (unchanged), 3.45% (unchanged), and 4.90% (previously 5.00%).
We expect yields to trend lower next week, as investors sustain buying activities in reaction to the moderation in the stop rate of the one-year paper at the last primary market auction.,
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