…Across the market segments, the average yield advanced by 156bps to 18.8% in the NTB segment and increased by 89bps to 18.8% in the OMO secondary market.
SAT, MAR 09 2024-theGBJournal|Activities in the T-bills secondary market remained bearish this week, as the average yield across all instruments expanded by 140bps to 18.8%.
Across the market segments, the average yield advanced by 156bps to 18.8% in the NTB segment and increased by 89bps to 18.8% in the OMO secondary market.
At this week’s NTB auction, the apex bank offered instruments worth N337.89 billion – N14.42 billion of the 91-day, N10.55 billion of the 182-day, and N312.92 billion of the 365-day bills – to participants.
Total subscription at the auction settled at N1.66 trillion (bid-to-offer: 4.9x), with more demand skewed towards the longer-dated bill (N1.54 trillion | 92.9% of total subscription).
The auction closed with the CBN allotting precisely what was offered for the 91D and 182D bills but over-allotting for the 365D bill (N1.29 trillion) at respective stop rates of 17.24% (previously: 17.00%), 18.00% (previously: 17.50%), and 21.49% (previously: 19.00%).
Following our expectations of liquidity surfeit in the system next week, we anticipate a likely recovery in participants’ demand for bills, resulting in a contraction of yields in the Treasury bills secondary market.
Additionally, the CBN is scheduled to hold an NTB PMA on Wednesday (13 March), where it is expected to roll over maturing bills worth NGN161.49 billion.
Meanwhile, the overnight (OVN) rate expanded by 281bps w/w to 31.0%, as the debits for last week Friday’s OMO auction (N1.06 trillion), net NTB issuances (N979.79 billion) and the transfer of NNPC’s remittance obligations from commercial banks to the CBN’s Treasury Sales Account (TSA) impacted the system.
However, due to DMBs’ utilisation of the CBN’s SLF facility, the average system liquidity settled higher at a net long position of N1.37 trillion (vs a net long position of N642.18 billion in the previous week).
Barring any liquidity mop-up action by the CBN next week, we envisage the OVN rate to trend southwards as the principal and coupon payments for the maturing FGN MAR 2024 bond (NGN771.11 billion) are expected to support system liquidity.
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