…the Debt Management Office (DMO) is scheduled to hold an NTB PMA next Wednesday (10 July) where it will roll over NGN166.11 billion worth of maturing bills.
SAT JULY 06 2024-theGBJournal| The overnight (OVN) rate expanded significantly by 753bps w/w to 32.5%, as the dual impact of last Friday’s late OMO auction (NGN264.33 billion) and Tuesday’s CRR maintenance (c.NGN500.00 billion) debits pressured the liquidity in the system.
Consequently, deposit money banks (DMBs)’ borrowing from the Central Bank of Nigeria’s (CBN) Standing Lending Facility (SLF) window surged (NGN5.38 trillion), causing the week’s average liquidity to close at a net long position of NGN1.13 trillion (vs net short position of NGN253.60 billion in the previous week).
Next week, we expect the system liquidity to remain relatively subdued, more so as we do not expect any significant inflows to saturate the financial system.
Consequently, we expect the OVN rate to rise further amid a possible net issuance at next Wednesday’s NTB auction exerting more pressure on liquidity levels.
Meanwhile, Proceedings in the Treasury bills secondary market remained bearish this week, as market participants (especially banks) sold off bills to satisfy their funding needs.
Subsequently, the average yield across all instruments advanced by 83bps to 23.4%. Across the market segments, the average yield expanded by 69bps and 91bps to 22.8% and 24.4%, respectively, at the NTB and OMO segments.
Cordros analysts believe the sustained dearth in the system liquidity next week will continue to undermine demand for instruments in the T-bills secondary market, causing yields to expand further.
Additionally, the Debt Management Office (DMO) is scheduled to hold an NTB PMA next Wednesday (10 July) where it will roll over NGN166.11 billion worth of maturing bills.
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