SAT FEB 22 2025-theGBJournal| Bullish sentiments dominated the Treasury bills secondary market this week driven by the trifecta impact of the lower-than-expectation January’s inflation data that printed 24.48% y/y, the Central of Nigeria’s MPC’s decision to hold rates, and market participants looking to fill unmet bids at the NTB PMA.
Accordingly, the average yield declined by 174bps to 22.4%. Across the market segments, the average yield declined by 189bps to 20.2% in the NTB segment, while it declined by 145bps to 25.0% in the OMO segment.
At Wednesday’s NTB auction, the Debt Management Office (DMO) offered bills worth N700.00 billion – N80.00 billion for the 91D, N120.00 billion for the 182D, and N500.00 billion for the 364D bills.
Subscription level settled lower at N2.41 trillion (previous auction: N3.22 trillion), with a bid-to-offer ratio of 3.4x (previous auction: 4.8x).
The auction closed with the DMO allotting N774.13 billion – N34.77 billion for the 91D, N34.98 billion for the 182D, and N704.38 billion for the 364D papers – at respective stop rates of 17.00% (previous: 18.00%), 18.00% (previous: 18.50%) and 18.43% (previous: 20.32%).
Next week, we expect continued downward repricing of yields in line with current market dynamics, further supported by the anticipated liquidity influx into the system.
Meanwhile, the overnight (OVN) rate expanded marginally by 3bps w/w to 32.8% amid inflows from FGN bond coupon payments (N904.93 billion) and OMO maturities (N10.00 billion).
Nonetheless, the average system liquidity remained unchanged, settling at a net short position of NGN1.08 trillion in this week and the previous week.
Next week, we expect inflows from OMO maturities (N1.03 trillion) to boost system liquidity, causing the OVN rate to temper from current levels.
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