SAT 04 DEC, 2021-theGBJournal- The overnight (OVN) rate expanded slightly by 8bps w/w to 15.8% this week, in light of the funding pressures for the CBN’s weekly OMO (NGN37.00 billion) and FX auctions that offset inflows from OMO maturities (NGN54.30 billion) and FGN bond coupon payments (NGN5.63 billion).
In the coming week, we envisage the OVN rate would remain elevated in the double-digit region as expected debits for CRR and CBN’s weekly auctions inflows are likely to outweigh expected inflows from OMO maturities (NGN50.00 billion).
Treasury bills
Bullish trading sentiments persisted in the Treasury bills secondary market on the back of declining primary market offer rates in the NTB segment, where market participants have focused their attention.
Accordingly, the average yield across all instruments contracted by 25bps to 4.9%. Across the market segments, most of the yield decline was witnessed at the NTB space (-35bps to 4.5%) while the OMO segment pared by 2bps to 5.5%.
The CBN sold NGN37.00 billion worth of bills to market participants at this week’s OMO auction and maintained stop rates across the three tenors, as with previous auctions.
We envisage that lower yields on T-bills would persist following expected improved buying activities in reaction to the lower rates on recently (re)issued bills.
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