SAT JUNE 01 2024-theGBJournal|Proceedings in the Treasury bills secondary market closed Friday on a mixed note amid profit-taking activities specifically on the CBN’s OMO bills.
As a result, the average yield across all segments increased slightly by 1bp to 21.6%. Across the market segments, the average yield declined by 25bps to 21.7% at the NTB segment but advanced by 64bps to 21.4% at the OMO segment.
Midweek, the apex bank floated its eighth OMO auction of the year, offering instruments worth N500.00 billion – N75.00 billion for the 90-day, N75.00 billion for the 174-day and N350.00 billion for the 363-day – to participants.
Notably, investors’ focus was largely on the 1-year bill amid zero interest in the 90-day bill.
Eventually, the CBN allotted N73.00 million for the 174-day bill and N499.27 billion for the 363-day bill at respective stop rates of 19.64% (previous: 19.74%) and 22.34% (previous: 22.49%).
Following the likelihood of no significant inflows into the financial system next week, we think demand for instruments in the Treasury bills secondary market will likely wane, causing yields in the space to rise further.
In addition, the CBN is scheduled to hold an NTB PMA on Wednesday (05 June) with N221.13 billion worth of maturities on offer.
Meanwhile, the overnight (OVN) rate contracted by 306bps w/w to 29.9%, as inflows from FX swap maturities (c. N500.00 billion), Remita electronic payments (c.N200.00 billion) and FGN bond coupon payments (N5.63 billion) supported the financial system amid debits for this week’s OMO auction (N500.00 billion).
Accordingly, the average system liquidity remained at a net long position but closed lower at N617.50 billion (vs N905.64 billion in the previous week).
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