SAT, JULY 29 2023-theGBJournal |The NTB secondary market closed on a bearish note this week, as the average yield across all instruments expanded by 278bps to 7.1%.
We attribute this week’s performance to dampened interest in bills as market players took profits off some positions.
Meanwhile, at the primary market, the CBN offered instruments worth N264.33 billion – N1.74 billion of the 91-day, N1.26 billion of the 182-day, and N261.33 billion of the 365-day bills – to participants.
The auction was moderately contested with a total subscription of N398.17 billion (bid-to-offer: 1.5x), with more demand skewed towards the longer-dated bill (N383.88 billion; 96.4% of the total subscription).
The auction closed with the CBN allotting precisely what was offered at respective stop rates of 6.00% (previously 2.86%), 8.00% (previously 3.50%), and 12.15% (previously 5.94%).
We anticipate a downward movement of yields in the T-bills secondary market in the coming week, following our expectation of healthy liquidity in the financial system.
Similarly, trading in the Treasury bonds secondary market was bearish as investors reacted to the 25bps hike in the MPR earlier in the week. As a result, the average yield advanced by 41bps to 13.1%.
Across the benchmark curve, the average yield expanded at the short (+84bps), mid (+10bps), and long (+37bps) segments due to sell-off activities on the MAR-2024 (+288bps), APR-2029 (+20bps), and JUN-2053 (+70bps) bonds, respectively.
We expect yields in the FGN bond secondary market to remain elevated in the medium term, specifically driven by our expectation of a sustained imbalance in the demand and supply dynamics.
However, we highlight that deliberate actions by the DMO to keep the cost of borrowing moderate remains a downside factor.
Twitter-@theGBJournal|Facebook-the Government and Business Journal|email:gbj@govbusinessjournal.com| govandbusinessj@gmail.com
