FRI. 04 FEB, 2023-theGBJournal| The buoyant liquidity in the system continues to trigger bullish sentiments in the Treasury bills secondary market, as the demand for OMO bills supported the lower yields in this space this week.
As a result, the average yield across all instruments dipped by 8bps to 1.7%. Across the market segments, the average yield contracted by 89bps to 2.0% in the OMO segment but expanded by 12bps to 1.6% in the NTB secondary market.
In the coming week, we believe yields for T-bills will increase slightly in the secondary market following the anticipated liquidity squeeze next week. Also, we expect participants in the NTB market auction to shift their focus to the primary market, with the CBN expected to roll over maturities worth N217.06 billion.
Meanwhile, the FGN bonds secondary market traded with bullish sentiments this week, as investors sold off their positions across the spectrum of the benchmark curve. Consequently, the average yield expanded by 13bps to 13.2%.
Across the benchmark curve, the average yield expanded at the short (+1bp), mid (+18bps), and long (+15bps) segments due to the profit-taking activities on the MAR-2024 (+25bps), NOV-2029 (+24bps), and APR-2049 (+66bps) bonds.
At Monday’s bond PMA, the DMO offered instruments worth N360.00 billion to investors through re-openings of the 13.98% FGN FEB 2028 (Bid-to-offer: 2.1x; Stop rate: 14.00%), 12.50% FGN APR 2032 (Bid-to-offer: 1.1x; Stop rate: 14.90%), 16.25% FGN APR 2037 (Bid-to-offer: 2.9x; Stop rate: 15.80%), and 14.80% FGN APR 2049 (Bid-to-offer: 2.9x; Stop rate: 15.90%) bonds.
Demand was higher across the four instruments as the total subscription level settled higher at N805.16 billion (vs. N532.20 billion in the previous auction), with the DMO allotting instruments worth N662.62 billion (translating to a bid-to-cover ratio of 1.2x).
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