SAT, JAN 20 2024-theGBJournal|This week, activities in the T-bills secondary market were mostly subdued amid mild sell pressures on few short-dated papers.
As a result, the average yield across all instruments expanded by 12bps to 4.1%. Across the market segments, the average yield advanced by 11bps to 3.4% in the NTB segment but pared by 1bp to 8.4% in the OMO secondary market.
At this week’s OMO auction, the CBN offered NGN300.00 billion – NGN75.00 billion of the 92-day, NGN75.00 billion of the 183-day, and NGN150.00 billion of the 365-day – in bills. Total subscription at the auction settled at NGN520.10 billion (previous auction: NGN414.20 billion) with bid-to-offer ratio of 1.7x.
Eventually, the CBN allotted NGN300.00 billion – NGN15.00 billion of the 92-day, NGN15.20 billion of the 183-day, and NGN270.00 billion of the 365-day – at respective stop rates of 10.00% (previously: 10.50%), 13.50% (previously: 14.00%), and 17.50% (previously: 17.75%).
We envisage yields on T-bills will likely inch higher next week, undermined by expectation of a potential liquidity squeeze.
In addition, we believe participants will shift focus to the NTB PMA holding on Wednesday (24 January), where the CBN is scheduled to roll over NGN231.82 billion worth of maturities.
Meanwhile, at the money market, Interbank liquidity experienced a considerable contraction this week.
On a week-on-week analysis, there was a significant 552 bps increase in the Open Buy Back (OBB) rate and a 545 bps increase in Overnight rate (O/N), causing the interbank rates to conclude the week at 22.10% and 23.25%, respectively.
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