SAT 31 JULY, 2021-theGBJournal- The overnight rate contracted by 21.00ppts w/w to 7.8%, as inflows from FGN bond coupon payments (NGN53.28 billion) and OMO maturities (NGN16.84 billion) outweighed funding pressures for net NTB issuances (NGN49.05 billion) and CBN’s weekly FX auctions.
We expect tighter liquidity in the system in the coming week, as funding for CBN’s weekly auctions are likely to outweigh expected inflows from OMO (NGN5.00 billion) maturities.
Trading in the Treasury bills secondary market sustained its bullish run for the third consecutive week, following an improved system liquidity, and market participants piling to the secondary market to fill the unmet demand from Wednesday’s NTB PMA.
Consequently, the average yield across all instruments contracted by 39bps to 7.6%. Across the market segments, the average yield at the OMO segment expanded by 12bps to 8.7%. Elsewhere, average yield at the NTB segment contracted by 100bps to 5.9% ad market participants reacted to lower stop rates at the auction.
At the bi-weekly NTB PMA, the CBN offered bills worth NGN216.19 billion and eventually allotted NGN265.24 billion – NGN3.17 billion of the 91D, NGN3.54 billion of the 182D and NGN258.53 billion of the 364D – at respective stop rates of 2.50% (previously 2.50%), 3.50% (previously 3.50%), and 8.20% (previously 8.67%).
We expect the yield on T-bills to inch higher in the coming week, given the expected tight liquidity picture.
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