SAT, 10 SEPT, 2022-theGBJournal| The Treasury bills secondary market sustained its bullish sentiments driven by the ample liquidity in the market and market participants looking to the secondary market to fill lost bids at the week’s NTB PMA. As a result, the average yield across all instruments contracted by 9bps to 8.4%.
Across the segments, the average yields contracted by 31bps and 1bp to 10.8% and 7.7% at the OMO and NTB secondary markets, respectively. At the NTB PMA, the CBN offered N214.74 billion – N20.77 billion of the 91-day, NGN31.29 billion of the 182-day, and NGN162.68 billion of the 364-day – in bills.
Eventually, the CBN allotted precisely what was offered at respective stop rates of 5.50% (previously 4.00%), 5.85% (previously 5.00%), and 10.00% (previously 8.50%).
In the coming week, we expect yields in the T-bills secondary market to expand from current levels, given our expectations of tight liquidity conditions.
Also, we anticipate quiet trading at the NTB segment as participants position for next week’s PMA, with N159.60 billion worth of maturities on offer.
Bonds
Elsewhere, activities in the Treasury bonds secondary market turned bearish this week, driven by investors’ sell-offs of positions at the short and mid spectrum of the curve. Consequently, the average yield inched higher by 18bps to 13.0%.
Across the benchmark curve, the average yield expanded at the short (+56bps), mid (+4bps) and long (+7bps) segments as investors sold off the APR-2023 (+293bps), FEB-2028 (+19bps) and MAR-2035 (+52bps) bonds, respectively.
Notably, the DMO revised the Q3-22 FGN bond issuance calendar, reflecting that the DMO has replaced the 13.00% FGN JAN-2042 bond with the 16.25% FGN APR-2037 bond.
We maintain our view of an uptick in bond yields in the medium term, as the FGN’s borrowing plan for 2022FY and expected fiscal deficit point towards an elevated supply.
Twitter-@theGBJournal| Facebook-The Government and Business Journal|email: gbj@govbusinessjournal.ng|govandbusinessj@gmail.com
