SAT, 07 MAY, 2022-theGBJournal | Just as envisaged, activities in the Treasury bills secondary market were bullish, as the buoyant system liquidity drove demand for bills.
Thus, the average yield across all instruments contracted by 3bps to 3.8%. Across the segments, the average yield contracted by 12bps to 4.1% at the OMO, while the NTB average yield was flat at 3.7%.
Notably, the Central Bank of Nigeria (CBN) held an OMO PMA on Thursday after a 5-week hiatus. At the OMO auction, the CBN offered and allotted NGN50.00 billion worth of OMO bills to participants and maintained stop rates across the three tenors – 110DTM: 7.0%, 187DTM: 5.8% and 362DTM: 10.1% – as with prior auctions.
We expect yield in the T-bills market to trend upwards, with system liquidity expected to be tight in the coming week.
At the NTB segment, we believe the outcome of the NTB auction scheduled for mid-week will shape sentiments. At the auction, the CBN will roll over NGN127.47 billion worth of instruments to market participants.
Meanwhile, the overnight (OVN) rate ended the week lower, as it crashed by 7.58ppts w/w to 4.9%. The contraction was supported by inflows from FAAC allocations (NGN448.46 billion) and OMO maturities (N20.00 billion) which subdued outflows for CBN’s weekly OMO and FX auctions.
Next week, we expect the OVN rate to trend upwards, as the N40.00 billion expected from OMO maturities may not be sufficient to offset the outflows from CBN’s auctions (NTB, OMO and FX).
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