FRI, MAR 29 2024-theGBJournal| Nigeria’s treasury bonds secondary market were subdued for most of the week, as investors evaluated the MPC’s hawkish stance and 200bps hike in the MPR on Tuesday.
Consequently, the average yield expanded by 15bps to 19.4% at the close of trade on Thursday. Across the benchmark curve, the average yield advanced at the short (+13bps) and mid (+73bps) segments following sell pressures on the JAN-2026 (+54bps) and JUN-2033 (+290bps) bonds, respectively, but closed flat at the long end.
Analysts say they expect expect cautious trading in the FGN bonds secondary market to continue as players reprice yields higher in tandem with the rising interest rates.
”Over the short term, we maintain that (1) anticipated monetary policy administration globally and domestically and (2) sustained imbalance in the demand and supply dynamics will keep yields elevated in the market,” Cordros Research analysts said in a note to theG&BJournal.
At the treasury bills market, bullish sentiments persisted,as the average yield across all instruments contracted by 6bps to 17.9%.
This is attributed to higher demand as investors looked to cover for lost bids at the NTB PMA on Wednesday.
Across the market segments, the average yield dipped by 4bps and 6bps to 17.7% and 18.5% in the NTB and OMO secondary markets, respectively.
At the primary auction, the CBN offered instruments worth N161.33 billion – N17.61 billion of the 91-day, N1.56 billion of the 182-day, and N142.16 billion of the 364-day bills.
Demand was at the highest level on record at a total subscription of N2.62 trillion (bid-to-offer: 16.2x) with more interest on the longer-dated bill (NGN2.48 trillion | 94.8% of the total subscription).
Eventually, the CBN over-allotted bills worth N1.19 trillion – N29.83 billion of the 91-day, N25.56 billion of the 182-day, and N1.13 trillion of the 364-day – at respective stop rates of 16.24% (unchanged), 17.00% (unchanged), and 21.12% (unchanged).
Meanwhile, this week, the overnight (OVN) rate expanded by 92bps to 28.2%, as debits for the net NTB issuances (N1.03 trillion) mopped up liquidity influx from the FAAC allocation (N800.03 billion) and FGN bond coupon payments (N202.34 billion).
Consequently, the average system liquidity settled at a net long position of N770.32 billion (vs a net long position of N760.53 billion in the previous week).
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