SAT 15 JAN, 2022-theGBJournal- For the third consecutive week, mixed trading persisted in the Treasury bills secondary following the uncertainty in the direction of yields at recent primary market auctions. Specifically, the average yield pared by 1bp to 4.8% this week.
Across the market segments, the average yield at the NTB segment contracted by 4bps to 4.4%. Elsewhere, the average yield at the OMO segment expanded by 11bps to 5.6%. At Wednesday’s NTB PMA, the CBN offered NGN77.61 billion for sale with a total subscription of NGN113.06 billion.
Accordingly, the CBN allotted NGN2.19 billion for the 91-day, NGN1.46 billion for the 182-day, and NGN53.90 billion for the 364-day bills – at respective stop rates of 2.50% (previously 2.49%), 3.44% (previously 3.49%), and 5.50% (previously 4.90 %).
Also, the CBN sold NGN20.00 billion worth of bills to market participants at this week’s OMO auction and maintained stop rates across the three tenors, as with previous auctions.
We expect the yield on T-bills to inch higher in the coming week as participants sell-off instruments to obtain liquidity for short-term obligations.
Meanwhile, this week, the overnight (OVN) rate remained elevated in the double-digit region but unchanged at 14.8% w/w, as funding pressures for CBN’s weekly OMO (NGN20.00 billion) and FX auctions offset inflows from OMO maturities (NGN59.50 billion).
In the coming week, we expect the OVN rate to trend northwards as the CBN would likely mop up the pent-up liquidity emanating from FGN bond coupon payments (NGN105.17 billion) and OMO maturities (NGN88.41 billion).
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