SAT. 04 MARCH 2023-theGBJournal | This week, the Treasury bills secondary market traded with mixed sentiments, albeit with a bearish undertone, as the average yield across instruments increased slightly by 2bps to 4.0%. We highlight that the excess liquidity in the system this week triggered sell-offs in the NTB segment in the market which drove the overall yield expansion.
Across the segments, the average yield increased by 4bps to 4.0% in the NTB secondary markets but contracted by 75bps to 3.0% in the OMO segment.
Next week, we expect lower demand for T-bills, given the expected liquidity squeeze in the financial system.
Nonetheless, we expect the result of the NTB PMA scheduled for next week to influence the sentiments in the NTB secondary market next week. At the auction, the CBN is set to roll over N224.50 billion worth of bills to market participants.
Meanwhile, Proceedings in the FGN bonds secondary market turned bearish this week following tepid demand for bonds as investors showed apathy for instruments specifically across the short and mid spectrum of the curve.
Consequently, the average yield across instruments expanded by 11bps to 13.3%. Across the benchmark curve, the average yield expanded at the short (+31bps) and mid (+17bps) segments following profit-taking on the APR-2023 (+90bps) and NOV-2029 (+22bps) bonds, respectively.
Meanwhile, the average yield contracted at the long (-9bps) end due to demand for the JAN-2042 (-22bps) bond.
In the medium term, we maintain our view that the frontloading of significant borrowings by FG for the year will result in an uptick in bond yields, as investors demand higher yields in the face of elevated supply.
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