TUE MAY 28 2024-theGBJournal| The FGN bond secondary market was quiet, as the average yield was flat at 18.5% Tuesday.
Across the benchmark curve, the average yield increased slightly at the short (+1bp) end due to mild sell-offs of the MAR-2025 (+2bps) bond while it was unchanged at the mid and long segments.
These high-yield auctions appear related to both foreign exchange management and the fight against inflation, the CBN raising the Monetary Policy Rate by 150bps to 26.25% last week, much as the market expected it would.
The T-bills secondary market remained bullish, as the average yield declined by 3bps to 21.7%. Across the curve, the average yield contracted at the short (-6bps), mid (-1bp) and long (-2bps) segments driven by investors’ interest in the 86DTM (-30bps), 177DTM (-1bp), 331DTM (-2bps) bills, respectively. Meanwhile, the average yield expanded by 71bps to 21.5% in the OMO segment.
At the T-bill primary auction, the CBN allotted N508.98bn (US$747.68m) worth of bills.
The auction recorded total subscription of N1.59tn, compared with N914.05 at the previous auction, implying a bid-to-cover ratio of 2.49x (vs 3.33x last time).
The average stop rate at the auction increased by 23 basis points to 18.21%, up from 17.98% at the previous auction. Stop rates for short-term and mid-term bills increased by 26bps to 16.50% and 45bps to 17.45%, respectively, while the long-term slipped by 1bp. The secondary market closed bullish as the average yield for T-bills fell by 19bps to 21.97%.
At the money market, the overnight lending rate expanded by 64bps to 32.1%, in the absence of any significant funding pressure on the system.
Last week, the Central Bank of Nigeria (CBN) offered N500.00 billion (US$741.41 million) in an OMO auction across 95, 179 and 361-day tenors. The offer met increased demand as total subscription reached N1.16tn (bid-to-offer of 2.32x vs 0.57x at the previous auction).
Stop rates across the trio of maturities increased to 19.00%, 19.74%, and 22.49% (a yield of 29.0%), respectively.
Total sales equaled N1.16 trillion, 4.05x more than at the previous auction.
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