SAT, APRIL. 15 2023-theGBJournal |The persistent squeeze in the financial system continues to trigger bearish sentiments in the Treasury bills secondary market, amid participants anticipating the influx of liquidity expected at the tail of this month.
Consequently, the average yield across the market at the end of trading week Friday expanded by 101bps to 8.5%. Across the market segments, the average yield in the NTB segment inched higher by 106bps to 8.8% but remained at 4.0% in the OMO segment.
At this week’s NTB auction, the CBN offered instruments worth N149.64 billion – N3.15 billion for the 91-day, N2.52 billion for the 182-day, and N143.97 billion for the 364-day.
Demand at the auction was slightly higher than the previous PMA, as the total subscription level settled at N280.35 billion (bid-to-offer settled at 1.9x vs. the previous auction: 1.2x).
Eventually, the CBN allotted bills worth N149.64 billion – N2.78 billion for the 91-day, N3.02 billion for the 182-day, and N143.84 billion for the 364-day – at respective stop rates of 6.00% (unchanged), 8.00% (unchanged), and 14.70% (previously: 14.74%).
Next week, we envisage lower demand for T-bills in the secondary market following our expectations of tight system liquidity. Thus, we believe yields in the secondary market will maintain the current northward trend.
Meanwhile, at the money market, the overnight (OVN) rate inched higher by 13bps w/w to 19.0%, reflective of the still depressed system liquidity.
For context, the average system liquidity remained at a net short position of N89.88 billion (vs a net short position of N64.90 billion in the previous week).
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