SAT FEB 08 2025-theGBJournal|The Treasury bills secondary market traded with bullish sentiments this week as market participants sought to fill unmet bids from the NTB PMA.
Accordingly, T-bills average yield declined by 64bps to 24.6%. Across the market segments Friday, the average yield declined by 89bps to 22.5% in the NTB segment, while it declined by 46bps to 27.1% in the OMO segment.
At Wednesday’s NTB auction, the Debt Management Office (DMO) offered bills worth N670.00 billion – N50.00 billion for the 91D, N120.00 billion for the 182D, and N500.00 billion for the 364D bills.
Subscription level settled significantly higher at N3.22 trillion (previous auction: N2.54 trillion), with a bid-to-offer ratio of 4.8x (previous auction: 4.8x).
The auction closed with the DMO allotting exactly what was offered – N31.94 billion for the 91D, N18.69 billion for the 182D, and N619.37 billion for the 364D papers – at respective stop rates of 18.00% (unchanged), 18.50% (unchanged) and 20.32% (previous: 21.80%).
We expect the liquidity dearth in the system next week to cause demand for bills to wane, causing yields in the T-bills secondary market to trend higher.
Meanwhile, the overnight (OVN) rate expanded by 318bps w/w to 32.8%, driven by the impact of large debits from last Friday’s OMO auction (N1.00 trillion), which outweighed inflows from net NTB maturities (N285.37 billion) and FGN bond coupon payments (N154.23 billion).
As a result, the average system liquidity settled at a net short position of N195.37 billion (vs a net long position of N514.01 billion in the previous week).
Next week, in the absence of significant inflows to saturate system liquidity, we expect the OVN rate to remain elevated.
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