…The overnight rate contracted by 174bps w/w to 28.2% as market liquidity saw a reversal in the trend from last week
SAT DEC 07 2024-theGBJournal| Treasury Bills average yield across all instruments expanded by 36bps to 26.4% by close of trading on Friday, as bears dominated the week’s trading activity.
This was despite the buoyant system liquidity as market participants largely focused on the newly issued 364-day bill, driving the bill to close at 21.5% (143bps lower than the auction stop rate).
Across segments, the average yield shrank by 56bps to 25.7% at the NTB segment and declined by 13bps to 27.3% at the OMO segment.
At Wednesday’s NTB auction, the Debt Management Office (DMO) offered bills worth N583.26 billion – N7.86 billion for the 91-day, N12.27 billion for the 182-day, and N563.12 billion for the 364-day bills.
Subscription level settled significantly higher at N2.55 trillion (previous auction: N1.12 trillion), with a bid-to-offer ratio of 4.4x (previous auction: 1.9x).
The auction closed with the DMO allotting instruments worth N756.70 billion – N2.31 billion for the 91-day, N13.25 billion for the 182-day, and N741.15 billion for the 364-day papers – at respective stop rates of 18.00% (unchanged), 18.50% (unchanged) and 22.93% (previous: 23.50%).
Based on our projection of a liquidity surfeit next week, we expect yields in the Treasury bills market to trend lower.
Additionally, the Central Bank of Nigeria (CBN) is scheduled to hold an NTB PMA next Wednesday (11 December), with N275.71 billion worth of maturing bills on offer.
Meanwhile, the overnight rate contracted by 174bps w/w to 28.2% as market liquidity saw a reversal in the trend from last week, with bank balances opening in positive territory (NGN451.07 billion).
The average system liquidity for the week settled at a net long position of N628.56 billion (vs net short position of N325.66 billion in the prior week).
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