SAT 12 FEB, 2022-theGBJournal- The Treasury bills secondary market ended the trading week on a bullish note, following the improved system liquidity supporting demand, moderations in the 1-year paper stop rate at Wednesday’s NTB PMA and market participants’ movement to the secondary market in a bid to fill lost auction bids.
Consequently, the average yield across all instruments contracted by 10bps to 4.6%. Across the market segments, the average yield at the NTB segment settled lower by 4bps to 4.3%. At the NTB auction, the CBN offered NGN98.01 billion for sale with a total subscription of NGN446.31 billion.
Accordingly, the CBN allotted NGN1.91 billion of the 91-day, NGN1.82 billion of the 182-day, and NGN211.23 billion of the 364-day bills – at respective stop rates of 2.48%, (unchanged), 3.30% (unchanged), and 5.20% (previously 5.40%).
Elsewhere, the average yield at the OMO segment expanded by 16bps to 5.6%. The CBN also offered and allotted NGN80.00 billion worth of OMO bills to participants and maintained stop rates across the three tenures, as with prior auctions.
We expect yields to trend marginally higher in the coming week as we expect a shortfall in system liquidity.
Meanwhile, the overnight (OVN) rate declined by 925bps w/w to 4.0%, as inflows from maturing FX swap contracts and OMO bills (NGN139.14 billion) outweighed funding pressures for net NTB issuances (NGN116.95 billion) and CBN’s weekly OMO (NGN80.00 billion) and FX auctions.
In the coming week, we envisage the OVN rate would trend northwards as expected debits for CRR, FGN bond and CBN’s weekly auctions are likely to outweigh the sole expected inflow from OMO maturities (NGN140.00 billion).
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