…Across the market segments, the average yield advanced by 57bps to 23.3% in the NTB segment but contracted by 11bps to 24.2% in the OMO segment.
SAT JULY 13 2024-theGBJournal| Bearish sentiments persisted in the NTB secondary market this week, following notable sell pressures on mid-dated papers amid pockets of post-auction demand from participants who lost out at the Wednesday NTB PMA.
Consequently, the average yield across all instruments expanded by 32bps to 23.7%. Across the market segments, the average yield advanced by 57bps to 23.3% in the NTB segment but contracted by 11bps to 24.2% in the OMO segment.
At this week’s T-bills auction, the Debt Management Office (DMO) offered NGN166.11 billion – NGN27.11 billion for the 91D, NGN1.49 billion for the 182D and NGN137.50 billion for the 364D bills – worth of instruments to investors.
Aggregate subscription settled lower at NGN308.66 billion (bid-to-offer: 1.9x), compared to the previous auction (bid-to-offer: 3.4x | NGN773.98 billion).
Eventually, the DMO allotted bills worth NGN207.27 billion – NGN28.47 billion for the 91D, NGN9.16 billion for the 182D and NGN169.64 billion for the 364D papers – with respective stop rates of 16.33% (unchanged), 17.44% (unchanged) and 21.24% (previous: 20.68%).
Next week, we expect mixed activities in the Treasury bills secondary market, as the modest liquidity in the financial system might be insufficient to drive strong demand for bills and cause yields to fall significantly
At the Money market, the overnight (OVN) rate declined by 7bps w/w to 32.5%, as the inflows from OMO maturities (NGN32.20 billion) and banks’ activity at the CBN SLF window cushioned the debits for net NTB issuance (NGN44.16 billion).
Thus, the week’s average liquidity closed at a net long position of NGN1.44 trillion (vs net long position of NGN1.13 trillion in the prior week).
Barring any significant outflows next week, we anticipate the inflows from OMO maturities (NGN16.00 billion) and FGN bond coupon payments (NGN65.36 billion) will likely support system liquidity, leading to a decline in the OVN rate.
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