SAT 26 MARCH, 2022-theGBJournal| Although the Treasury bills secondary market started the trading week in a lull, it ended on a bullish note, as market participants reacted to the declining marginal rates at the last FGN bonds primary market auction (PMA).
Consequently, the average yield across all instruments declined by 7bps to 3.3%. Across the market segments, the average yield contracted by 6bps to 3.2% at the NTB segment but closed flat at 3.6% at the OMO segment, possibly as market participants stayed on the sidelines in anticipation of an OMO auction.
Notably, the CBN did not float an OMO auction this week for the first time this year after twenty consecutive weeks of regular auctions.
In the coming week, we expect the outcome of the NTB auction to shape the direction of yields in the T-bills market. The CBN is set to roll over NGN143.29 billion worth of maturities to market participants at the auction.
Meanwhile, the overnight (OVN) rate contracted by 350bps w/w to 6.2% this week, as inflows from FAAC disbursements (NGN354.35 billion) and OMO maturities (NGN42.00 billion) outweighed debits for CRR, the FGN’s monthly bond (NGN297.01 billion) and CBN’s weekly FX auctions.
In the coming week, we expect the OVN rate to remain elevated in the double-digit region as expected inflows from OMO maturities (NGN10.00 billion) and FGN bond coupons (NGN40.77 billion) are likely to be offset by funding pressures for next week’s auctions (NTB, OMO and FX).
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