SAT 05 FEB, 2022-theGBJournal- Trading sentiments in the Treasury bills secondary market turned bearish, as market participants took profits off their positions on some long-dated instruments in both segments of the market.
Thus, the average yield increased by 8bps to 4.7%. Across the market segments, most of the yield expansion was witnessed at the OMO space (+26bps to 5.5%), while the NTB segment expanded slightly by 3bps to 4.4%, amid efforts by local banks to sterilize idle funds.
In the coming week, we expect the outcome of the NTB auction to shape the direction of yields in the T-bills market. The Central Bank of Nigeria (CBN) is set to roll over NGN98.01 billion worth of maturities to market participants at the auction.
At the money market, the overnight (OVN) rate expanded by 12.00ppts w/w to 13.3% this week, following debits for CRR, CBN’s weekly FX auction that offset the sole inflow from OMO maturities (NGN102.23 billion). However, system liquidity was healthy (average net liquidity position this week: NGN285.54 billion vs last week: NGN271.75 billion) for most of the week.
In the coming week, we expect the OVN to remain relatively elevated in the double-digit region, as the outflows for CBN’s auctions (NTB, OMO and FX) may outweigh the sole inflow from OMO maturities (NGN140.00 billion).
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