FRI 15 APRIL, 2022-theGBJournal | The Treasury bills secondary market remained bearish, with market participants readying bids for this week’s NTB PMA in anticipation of an increase in NTB stop rates.
Consequently, the average yield across all instruments inched higher by 2bps to 3.4%. Across the market segments, the average yield expanded by 11bps to 3.7% in the OMO segment but was flat at 3.3% in the NTB segment.
At this week’s NTB PMA, the Central Bank of Nigeria (CBN) offered NGN141.26 billion – NGN2.19 billion of the 91-day, NGN6.95 billion of the 182-day, and NGN132.12 billion of the 364-day – in bills.
Ultimately, the CBN allotted NGN159.03 billion – NGN4.51 billion of the 91-day, NGN10.56 billion of the 182-day and NGN143.97 billion of the 364-day bills – at respective stop rates of 1.74% (previously: 1.75%), 3.00% (unchanged), and 4.60% (previously: 4.45%).
With system liquidity expected to be tight in the coming week, we anticipate a further increase in the average yields on T-bills from current levels.
At the money market this week, the overnight (OVN) rate expanded by 492bps w/w to 11.2%, as outflows for net NTB issuances (NGN17.78 billion) pressured the system amid the week’s sole inflow from OMO maturities (NGN48.47 billion).
We expect system liquidity to be pressured in the coming week. We believe the anticipated inflows from OMO maturities (NGN23.95 billion) will most likely be outweighed by the weekly auctions (OMO & FX) and possible CRR debits. Thus, we expect the OVN rate to trend northwards.
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