SAT, 03 SEPT, 2022-theGBJournal| Trading in the Treasury bills secondary market sustained last week’s sentiments, remaining bullish on account of the improved system liquidity. Consequently, the average yield across all instruments contracted by 9bps to 8.5%.
Across the segments, the average yield fell by 14bps to 11.1% at the OMO secondary market and by 7bps to 7.7% in the NTB segment.
Meanwhile, at this week’s OMO auction, the CBN offered and sold N50.00 billion worth of bills to market participants and maintained stop rates across the three tenors, as with previous auctions.
As we anticipate weakened system liquidity next week, we expect yields to trend upwards. Also, we expect quiet trading at the NTB market as participants position for next week’s PMA, with N214.74 billion worth of maturities on offer.
Bonds
Similarly, the Treasury bonds secondary market traded with bullish sentiments, as investors continued bargain hunting on select instruments, especially at the short spectrum of the benchmark curve.
As a result, the average yield declined by 2bps to 12.8%. Across the curve, the average yield was lower at the short (-7bps) and long (-1bp) ends, as investors demanded the JAN-2026 (-25bps) and JUL-2042 (-13bps) bonds, respectively. Conversely, the average yield expanded at the mid (+3bps) segment following sell-offs of the APR-2032 (+7bps) bond.
We maintain our view of an uptick in bond yields in the medium term, as the FGN’s borrowing plan for 2022FY and expected fiscal deficit point towards an elevated supply.
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