SAT, 08 OCT, 2022-theGBJournal| The bears dominated the Treasury bills secondary market this week as market participants exited positions to provide some respite to their funding obligations.
Consequently, the average yield across all instruments expanded by 17bps to 7.9%. However, across the segments, the average yield dipped by 2bps to 10.3% at the OMO secondary market, while most of the yield expansion was witnessed at the NTB segment (+17bps to 7.3%).
Given the tight liquidity picture, we still expect the average yield on T-bills to maintain its uptick next week. Also, we expect quiet trading at the NTB market as participants position for next week’s PMA, with NGN190.89 billion worth of maturities on offer.
Bonds
Trading in the Treasury bonds secondary market was broadly bearish this week, as demand for FGN bonds remained tepid.
We believe this reflects expectations regarding higher yields in the near term. Consequently, the average yield expanded by 24bps to 13.5%.
Across the benchmark curve, the average yield was higher at the short (+49bps), mid (+11bps), and long (+17bps) segments, following sell-offs of the MAR-2024 (+177bps), APR-2032 (+21bps), and MAR-2035 (+52bps) bonds, respectively.
We maintain our stance of an uptick in yields in the medium term as the FGN’s borrowing plan for 2022FY and expected fiscal deficit point towards an elevated supply level over the rest of the year.
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