SAT NOV 09 2024-theGBJournal|The FGN bond secondary market were bullish as the average yield declined by 8bps to 19.4%, attributed to the surplus interbank liquidity at the start of the week.
Across the benchmark curve, the average yield decreased at the short (-23bps) end following demand for the APR-2025 (-66bps) bond, but expanded at the mid (+16bps) segment driven by sell pressures on the FEB-2031 (+40bps) bond. The average yield closed flat at the long end.
Investors say they envisage a possible upward repricing of bonds next week as participants look to sell off their positions in anticipation of higher yields.
Their are short-term expectation of elevated yields consequent on anticipated monetary policy administration globally and domestically, and sustained imbalance in the demand and supply dynamics.
Meanwhile, bullish sentiments dominated the Treasury bills secondary market this week as the average yield across all instruments declined by 12bps to 24.9%.
We attribute this performance to participants looking to fill unmet bids at this week’s NTB PMA.
Across the market segments, the average yield dipped by 26bps to 24.0% in the NTB segment but increased by 11bps to 26.3% in the OMO segment.
At Wednesday’s NTB auction, the DMO offered N513.43 billion – N20.75 billion for the 91D, N5.44 billion for the 182D and N487.24 billion for the 364D bills – worth of instruments to investors.
Aggregate subscription settled higher at N669.93 billion (bid-to-offer: 1.3x), compared to the previous auction (N489.84 billion | bid-to-offer: 1.3x).
Eventually, the Debt Management Office (DMO) allotted N626.33 billion – N14.00 billion for the 91D, N3.40 billion for the 182D and N608.93 billion for the 364D papers – at respective stop rates of 18.00% (previous: 17.00%), 18.50% (previous: 17.50%) and 23.00% (previous: 20.65%).
Also, the CBN conducted an OMO auction on Tuesday offering instruments worth N300.00 billion – N25.00 billion for the 95D, N25.00 billion for the 179D and N250.00 billion for the 365D – to investors.
Total subscription settled at N1.45 trillion (bid-to-offer: 4.8x), with the Central Bank of Nigeria (CBN) allotting exactly what was demanded at the long end at a stop rate of 24.28% (unchanged), with no sales at the short and mid segments.
Following our expectation of a possible liquidity deficit in the coming week, we expect demand for bills to wane, causing yields to trend higher.
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