WED, OCT 04 2023-theGBJournal|Trading activities in the NTB secondary market and the FGN Bonds secondary market were bullish Wednesday, following buying interest.
The average yield at NTB secondary market contracted by 4bps to 7.8%. Across the curve, the average yield closed flat at the short and long ends but declined at the mid (+12bps) segment following buying interest in the 176DTM (-73bps) bill. Elsewhere, the average yield was unchanged at 12.1% in the OMO segment.
Proceedings in the FGN bonds secondary market were bullish, as the average yield contracted by 3bps to 14.4%. Across the benchmark curve, the average yield declined at the short (-11bps) end due to demand for the MAR-2024 (-54bps) bond but closed flat at the mid and long segments.
Last week, in the secondary market for T-bills, performance was mixed as average yields slipped by 3bps to 7.94% pa. Average yields at the short and medium-end of the yield curve declined by 61bps to 3.65%, and by 58bps to 6.55%, respectively, while average yield at the longend rose by 79bps to 10.49%.
At the secondary market for FGN bonds, average yield also dipped by 3bps to 14.44%; with average yield across the short and long-end of the curve declining by 15 and 3 basis
points to 12.52% and 15.59%, respectively. However, at the mid-end of the curve, average yield rose by 6 basis points to 14.74%.
At the Primary Market Auction for Treasury Bills which was held last week, the CBN offered N177.12bn across the 91, 184, and 364-day maturities.
The auction met high demand across the trio of instruments with total subscription reaching N786.79bn implying a bid to offer of 4.44x (versus 4.23x at the previous auction). High system liquidity which was further boosted by FAAC disbursement and bond coupon payments
spurred the demand level.
Total allotment of N177.12bn was made, while rates across the 91-day, 184-day and 364-day maturities declined to 4.99%, 6.55% and 11.37% respectively (versus 6.50%, 7.00% and 12.98% at the previous auction).
The bond issuance calendar for Q4 is expected to guide insight into the direction of rates for the rest of the year.
In the short term we anticipate a potential stabilisation of interest rates hinged on our assumption that the borrowing calendar will be light.
Like the rest of the market, Coronation Research analysts says they expect the newly-appointed Governor of the CBN to express his own preferences for interest rate development, though his tenure has only begun and it may take a while for these to become clear.
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