SAT MARCH 08 2025-theGBJournal| The Treasury bills secondary market remained bullish this week as market participants sought to fill unmet bids from the NTB PMA.
The average yield declined by 41bps to 20.8%. Across the market segments, average yield declined by 73bps and 9bps to 19.2% and 22.4%, in the NTB and OMO segments, respectively.
At Wednesday’s NTB auction, the Debt Management Office (DMO) offered bills worth N650.00 billion –N70.00 billion for the 91D,N80.00 billion for the 182D, and N500.00 billion for the 364D bills.
Subscription level settled lower at N1.92 trillion (previous auction: N2.41 trillion), with a bid-to-offer ratio of 3.0x (previous auction: 3.4x).
The auction closed with the DMO allotting N830.44 billion – N61.52 billion for the 91D, N50.95 billion for the 182D, and N717.97 billion for the 364D papers – at respective stop rates of 17.00% (unchanged), 17.75% (previous: 18.00%) and 17.82% (previous: 18.43%).
Also, the CBN conducted an OMO auction on Thursday, offering instruments worth N600.00 billion –N300.00 billion for the 355D and N300.00 billion for the 362D – to investors.
Total subscription settled at NGN1.88 trillion (bid-to-offer: 3.1x), with the CBN allotting N1.68 trillion –N725.70 billion for the 355D and N951.20 billion for the 362D bills at a respective stop rates of 19.19% (previous: 23.95%) and 19.45% (previous: 23.98%).
We expect yields to further decline next week underpinned by the continued downward repricing of yields and Investors looking to fill unmet bids at next week’s market auction. The DMO is scheduled to conduct an NTB PMA next Wednesday (March 12), with NGN550.00 billion worth of maturities on offer.
Meanwhile, the FGN bond secondary market was bullish this week as investors reinvested coupon inflows into short-dated papers, driving the average yield down by 8bps to 18.5%.
Across the benchmark curve, the average yield decreased at the short (-50bps) driven by demand for the MAR-2025 (-248bps) bond, but expanded at the, mid (+9bps) and long (+1bp) segments, due to the selloff of the JUL-2030 (+24bps), and FEB-2031 (+35bps) bonds, respectively.
Over the medium term, we expect a moderation in yields consequent on the (1) anticipated monetary policy administration and imbalance in the demand and supply dynamics.
At the money market, the overnight (OVN) rate expanded by 34bps w/w to 27.7% as OMO auction debits (N1.68 trillion) and net NTB issuances (N180.44 billion) outweighed inflows from FGN bond coupon payments (N279.29 billion).
Consequently, the average system liquidity remained in a net short position, settling at N101.66 billion (vs N388.14 billion in the previous week).
X-@theGBJournal|Facebook-the Government and Business Journal|email:gbj@govbusinessjournal.com|govandbusinessj@gmail.com
