SAT, 29 OCT, 2022-theGBJournal| Bearish sentiments persisted in the Treasury bills secondary market this week as participants reacted to the higher stop rates at Wednesday’s NTB PMA.
As a result, the average yield across all instruments expanded by 59bps to 10.9%. Across the segments, the average yields inched 76bps higher to 11.0% at the NTB segment but contracted by 2bps to 10.2% at the OMO secondary market.
At this week’s NTB PMA, the CBN offered participants N240.26 billion worth of bills.
However, the auction was undersubscribed as the total subscription settled at N136.96 billion – translating to a 1.3x bid-to-cover.
Eventually, the CBN allotted N1.74 billion of the 91-day, N10.12 billion of the 182 – day and N97.33 billion of the 364-day – at respective stop rates of 6.50% (previously 6.47%), 8.05% (previously 7.90%), and 14.50% (previously 13.00%).
Next week, we expect the yields on T-bills to maintain the same trajectory, following the thin liquidity expected in the system.
Similarly, trading in the Treasury bonds secondary market closed the week on a bearish note as investors continued to reprice bonds upwards. As a result, the average yield across all instruments expanded by 16bps to 14.3%. Across the benchmark curve, the average yield contacted at the short (-26bps) end due to investors’ buying interest on the APR-2023 (-234bps) bond but expanded at the mid (+14bps) and long (+48bps) segments following profit-taking activities on the NOV-2029 (+19bps) and APR-2049 (+126bps) bonds, respectively.
In the medium term, we maintain our expectation of an uptick in yields in the bonds market, as both the FGN’s borrowing plan for 2022FY and the expected fiscal deficit point towards an increased supply.
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