SAT, 21 MAY, 2022-theGBJournal | Trading activities in the NTB secondary market were mixed albeit with a bearish bias, following the uncertainty in the direction of yields at the recent primary market auctions.
Thus, the average yield across all instruments expanded slightly by 1bp to 3.8%. Across the segments, the average yield contracted by 7bps to 4.0% at the OMO segment but expanded by 3bps to 3.7% at the NTB segment.
Considering the relatively lower inflows expected in the system next week, we expect low demand for T-bills and a slight expansion in yields from current levels. However, at the NTB segment, we expect market focus to be shifted to the PMA on Wednesday, where the CBN is expected to roll over NGN153.03 billion worth of instruments.
Meanwhile, the overnight (OVN) rate expanded by 333bps w/w to 12.5%, as debits for CRR, FGN bond (NGN378.41 billion) and CBN’s weekly auctions (OMO and FX) pressured the system and offset inflows from OMO maturities (NGN35.00 billion), FGN bond coupon payments (NGN8.50 billion) and FX retail refunds.
We expect system liquidity to remain strained next week, as expected inflows worth a combined NGN39.37 billion from OMO maturities (NGN30.00 billion) and FGN bond coupon payment (NGN9.37 billion) may not be sufficient to saturate the system.
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