SAT 08 JAN, 2022-theGBJournal- The overnight (OVN) rate expanded by 425bps w/w to 14.8% this week, as funding pressures for Central Bank of Nigeria’s (CBN) CRR debits and weekly OMO (NGN50.00 billion) and FX auctions outweighed inflows from OMO maturities (NGN70.00 billion).
In the coming week, we expect the OVN rate to trend higher as debits for CBN’s weekly auctions will likely offset the sole expected inflows from OMO maturities (NGN60.00 billion).
Treasury bills
Slight bullish sentiments returned to the Treasury bills secondary market on the back of declining primary market offer rates in the NTB segment and increasing bids for OMO bills. Thus, the average yield contracted by 2bps to 4.8%.
Across the market segments, the average yield at the NTB segment pared by 1bps to 4.4%. Similarly, the average yield at the OMO segment declined by 1bp to 5.5%. On Thursday, the CBN sold NGN50.00 billion worth of bills to market participants and maintained stop rates across the three tenors, as with previous auctions.
In the coming week, we expect the outcome of the NTB auction to shape the direction of yields in the T-bills market. The CBN is set to roll over NGN77.61 billion worth of maturities to market participants at the auction.
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