…The overnight (OVN) rate expanded by 237bps w/w to 21.2% in the Money Market
SAT, FEB 03 2024-theGBJournal| Sentiments in the NTB secondary market remained bearish this week as the tight liquidity in the financial system triggered sell-offs across the curve.
The Market kicked off on a calm note as focus was also steered to the bond auction.
The Central Bank of Nigeria (CBN) floated and sold N350 billion across the 92-day, 176-day and 365-day bills which closed at 10.00, 13.50% and 17.00%.
Total subscription at the auction settled at N533.80 billion (Bid-to-offer: 1.5x), with more demand skewed towards the longer-dated bill (N518.80 billion).
Furthermore, rates remained constant except on the 365-day bill, dipping by 50bps from previous auction level.
Sequel to the auction, we witnessed demand on the newly issued OMO bill trading as low as 13% levels before retracing to as high as 16.30% on the bid.
The CBN also issued a circular ceasing daily CRR debits and adopting an updated CRR mechanism.
Week-on-week, across the market segments, the average yield expanded by 293bps to 9.7% in the T-bills segment and advanced by 124bps to 9.7% in the OMO secondary market.
Cordros Research analysts tell theG&BJournal that yields in the Treasury bills secondary market will likely rise further next week, as expectation of a possible liquidity dearth might weigh on bill demand.
In addition, the CBN is scheduled to conduct an NTB PMA on Wednesday (07 February), with N417.06 billion worth of maturities available on offer.
Meanwhile, the overnight (OVN) rate expanded by 237bps w/w to 21.2% in the Money Market, as the settlements from the FGN bond (N418.20 billion) and OMO (N350.00 billion) auctions outweighed the inflows from FAAC disbursements (N743.13 billion).
Consequently, the average system liquidity closed lower at a net long position of N133.10 billion (vs a net long position of N487.45 billion in the previous week).
A further squeeze in system liquidity is anticipated at the Money Market as the expected sole inflow from OMO maturities (N26.00 billion) may be insufficient to support the financial system amid a possible net NTB issuance.
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