SAT FEB 15 2025-theGBJournal| Activities in the FGN bond secondary and treasury bills secondary market were bullish, driven by interests in short- and mid-dated papers due to expectations of a decline in rates.
Hence, the average yield inched higher by 28bps to 20.3%. Across the benchmark curve, the average yield decreased at the short (-39bps), mid (-22bps), and long (-2bps) segments following demand for the JAN-2026 (-110bps), JUL-2030 (-40bps) and JUN-2053 (-18bps) bonds, respectively.
Next week, we expect the release of January’s CPI data to influence the direction of market activities. Meanwhile, we also maintain our medium-term expectation of a moderation in yields consequent on anticipated direction of monetary policy administration, and slower borrowing pace by the Federal Government.
The Treasury bills secondary market was bullish this week despite the tight interbank liquidity. We attribute this to investors’ expectations of a lower January CPI print and a likely HOLD decision at the upcoming MPC meeting, which in turn is expected to drive a moderation in rates.
Consequently, the average yield declined by 51bps to 24.1%. Across market segments, the average yield declined by 45bps and 67bps to 22.1% and 26.4% at the NTB and OMO secondary markets, respectively.
Notably, the CBN floated an OMO auction on Thursday, offering instruments worth N600.00 billion – N300.00 billion for the 355D and N300.00 billion for the 362D.
Total subscription settled at N1.92 trillion (bid-to-offer: 3.2x), with the CBN allotting N1.40 trillion – N402.85 billion for the 355D and N993.00 billion for the 362D – at respective stop rates of 21.32% and 21.45%.
The overnight (OVN) rate expanded by 5bps w/w to 32.8% as OMO auction debits (N1.40 trillion) outweighed inflows from FGN bond coupon payments (N283.11 million).
As a result, the average system liquidity weakened, settling at a net short position of N1.08 trillion (vs a net short position of N195.37 billion in the previous week).
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