SAT 13 FEB, 2021-theGBJournal- The Treasury bills secondary market ended the week on a bearish note, as the average yield across all instruments expanded by 268bps to 4.2%.
We attributable the market outcome to the upward repricing of OMO instruments especially on Monday, in reaction to the higher stop rates at last week’s OMO auction. Thus, average yield in the space jumped by 473bps to 6.7%.
At this week’s OMO auction, the CBN sold NGN169.00 billion worth of bills across the three tenors, with stop rates unchanged from last week’s level. Elsewhere, trading activity in the NTB segment (average yield expanded by 45bps to 1.5%) was muted for a large part of the week, as market participants anticipated higher yields at the bi-weekly NTB PMA.
At the PMA, the CBN struggled to keep the rates low as market participants made aggressive bids on the NGN169.78 billion worth of instruments on offer, in expectation of a replication of the higher rates at the OMO segment.
In its resolve to keep rates tempered, the CBN eventually allotted NGN24.67 billion of the 91-day, NGN16.06 billion of the 182-day and NGN90.15 billion of the 364-day – at respective stop rates of 1.00% (previously 0.55%), 2.00% (previously 1.30%), and 4.00% (previously 2.00%).
In line with the recent developments in the market, we maintain our expectation of higher yields in the T-bills secondary market.
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