SAT 19 FEB, 2022-theGBJournal- Bullish trading sentiments continued in the Treasury bills secondary market, fuelled by the downward direction of yields at the bonds primary market.
Thus, the average yield across all instruments declined by 16bps to 4.4%. Across the market segments, the average yield contracted by 36bps to 5.3% at the OMO segment.
Similarly, the average yield moderated by 6bps to 4.2% at the NTB segment as local banks rerouted idle funds to the long-dated instruments. At this week’s OMO auction, the CBN offered and allotted NGN60.00 billion worth of bills to participants, maintaining stop rates across the three tenors, as with prior 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 NGN115.28 billion worth of maturities to market participants at the auction.
The overnight (OVN) rate expanded by 10.00ppts w/w to 14.0% this week, as elevated funding pressures for CRR debits, FGN bond auction settlement (NGN297.39 billion), CBN’s weekly OMO (NGN60.00 billion), and FX auctions outweighed inflows from OMO maturities (NGN135.90 billion) and FX retail refunds.
Next week, we envisage that the OVN will remain relatively range bound in the double-digit region, as the expected inflows from OMO maturities (NGN230.00billion) and FGN bond coupon payments (NGN49.89 billion) support liquidity positions amid CBN’s weekly auctions.
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