…Across the market segments, the average yield inched higher by 10bps to 22.1% at the NTB segment and advanced by 175bps to 23.5% at the OMO segment.
…The overnight (OVN) rate contracted by 104bps w/w to 25.0%
SAT JUNE 29 2024-theGBJournal| The average yield across all instruments expanded by 63bps to 22.5% as the Treasury bills secondary market closed bearish this week, with notable sell pressures on the CBN-issued OMO bills.
Across the market segments, the average yield inched higher by 10bps to 22.1% at the NTB segment and advanced by 175bps to 23.5% at the OMO segment.
This week’s NTB auction saw the DMO offering instruments worth N284.26 billion – N29.83 billion for the 91-day, N30.67 billion for the 182-day and N168.21 billion for the 364-day papers – to investors.
The auction was massively contested as total subscriptions level settled at NGN773.98 billion (bid-to-offer: 3.4x | previous auction: N538.02 billion).
The auction closed with the DMO allotting instruments worth N284.26 billion – N28.15 billion for the 91-day, N36.44 billion for the 182-day, and N219.67 billion for the 365-day bills – at respective stop rates of 16.30% (unchanged), 17.44% (unchanged) and 20.68% (previous: 20.50%).
Next week, we expect the liquidity surfeit in the system to support buying interest in the Treasury bills secondary market, thus causing yields to temper from current levels.
At the money market, This week, the overnight (OVN) rate contracted by 104bps w/w to 25.0%, as the settlements for the FGN bond auction (N297.01 billion) and net NTB issuances (N55.55 billion) had minimal impact on the healthy liquidity overlay.
However, DMBs’ sustained usage of the apex bank’s Standing Deposit Facility ensured the week’s average liquidity remained at a net short position (N253.60 billion | prior week: N563.87 billion).
In the absence of an OMO auction by the CBN to absorb the surplus liquidity in the financial system, we expect the OVN rate to maintain its downtrend next week.
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