SAT, 23 JULY, 2022-theGBJournal| The Treasury bills secondary market sustained last week’s bearish sentiments following the unhealthy liquidity in the system.
As a result, the average yield across all instruments expanded by 66bps to 7.7%. Across the segments, the average yield increased by 158bps and 35bps to 8.9% and 7.3% at the OMO and NTB secondary markets, respectively.
Following the lower inflows expected in the system next week, we expect a low demand for T-bills and a slight expansion in yields from current levels. Also, we expect market focus to be shifted to the NTB PMA holding on Wednesday (27 July), with the CBN expected to roll over NGN264.28 billion worth of instruments.
Bonds
The bears continued to dominate the Treasury bonds secondary market as the average yield across instruments expanded by 38bps to 11.9%. We attribute this week’s bearish sentiment to investors re-pricing bonds in reaction to the MPC’s rate hike on Tuesday.
Across the benchmark curve, the short (+89bps), mid (+9bps), and long (+14bps) instruments bore the impact of the sell-offs as investors took profits off the MAR-2024 (-184bps), NOV-2029 (+37bps), and APR-2049 (+38bps) bonds, respectively.
At this month’s bond PMA, the DMO offered instruments worth N225.00 billion to investors through re-openings of the 13.53% MAR 2025 bond (Bid-to-offer: 0.2x; Stop rate: 11.0%), 12.50% APR 2032 (Bid-to-offer: 0.3x; Stop rate: 13.0%) and 13.00% JAN 2042 (Bid-to-offer: 1.4x; Stop rate: 13.75%) bonds.
Demand was relatively low, with a subscription level of N142.29 billion, translating to a bid-to-offer ratio of 0.6x (vs bid-to-offer: 2.5x in the previous auction). The DMO eventually allotted instruments worth NGN123.84 billion, resulting in a bid-to-cover ratio of 1.2x.
Twitter-@theGBJournal| Facebook-The Government and Business Journal|email: gbj@govbusinessjournal.ng|govandbusinessj@gmail.com
