FRI. 07 APRIL 2023-theGBJournal | This week, activities in the Treasury bills secondary market closed on a mixed note, albeit with a bearish undertone, as market participants traded cautiously given the low system liquidity.
Thus, the average yield across all instruments increased by 3bps to 7.5%. Across the market segments, the average yield at the NTB segment expanded by 3bps to 7.8% but remained at 4.0% in the OMO segment.
Next week, we anticipate an increase in T-bills yields given the expected tight liquidity position. Nonetheless, we expect market focus to be shifted to the NTB PMA holding on Wednesday (12 April), where the CBN is scheduled to roll over N149.64 billion worth of maturities.
The Treasury bonds secondary market remained bearish this week, as investors continued to sell-off positions across the mid and long segments of the curve. Consequently, the average yield increased by 11bps w/w to 13.7%.
Across the benchmark curve, the average yield expanded across the short (+13bps), mid (+13bps), and long (+5bps) segments, as investors sold off the MAR-2024 (+35bps), NOV-2029 (+22bps) and APR-2037 (+30bps) bonds, respectively.
In the medium term, we believe that the significant borrowings expected from the FG for the year will result in an uptick in bond yields, as investors demand higher yields in the face of elevated supply. However, over the short term, the maturities expected should drive market activities and cause market yields to descend, especially on on-the-run instruments, as investors reinvest funds.
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