SAT, MAY. 06 2023-theGBJournal|Bullish sentiments persisted in the Nigerian Treasury bills secondary market this week, as the healthy liquidity in the system inspired local investors’ demand for bills. As a result, the average yield across all instruments contracted by 4bps to 7.5%.
We anticipate higher yields in the secondary market next week, following our expectation of a tightening in system liquidity conditions. Also, we expect market focus at the dawn of the week to be shifted to the NTB PMA holding on Wednesday (10 May), where the CBN is scheduled to roll over N143.98 billion worth of maturities.
As envisaged, the Treasury bonds secondary market closed on a bullish note, as demand for instruments in this space was supported by the excess liquidity in the system. As a result, the average yield dipped by 4bps to 14.1%. Across the benchmark curve, the average yield contracted at the short (-30bps) end following the interest on the MAR-2024 (-191bps) bond but expanded at the mid (+6bps) and long (+9bps) segments due to the selloff on the APR-2032 (+17bps) and MAR-2050 (+7bps) bonds, respectively.
Over the medium term, we maintain our expectations of an uptick in bond yields, as we believe investors will demand higher yields, which will be driven by significant borrowings expected from the FG for the year.
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