SAT, JAN 13 2024-theGBJournal|Proceedings in the Treasury bills secondary market this week were bullish, as the average yield across the market contracted by 247bps to 4.0%.
We attribute this week’s secondary market performance to the feed-through effect from the markedly lower yields at the Wednesday PMA and auction participants looking to fill unmet bids.
Across the market segments, the average yield dipped by 267bps to 3.3% in the T-bills segment and contracted by 247bps to 8.4% in the OMO secondary market.
At the NTB primary auction, the CBN offered instruments worth NGN56.56 billion – NGN2.78 billion for the 91-day, NGN1.49 billion for the 182-day, and NGN52.29 billion for the 364-day bills. The auction was massively contested as the total subscription settled at NGN1.14 trillion (bid-to-offer: 20.2x).
Eventually, the CBN allotted exactly what was offered – at respective stop rates of 2.44% (previously: 7.00%), 4.22% (previously: 10.00%), and 8.40% (previously: 12.24%).
Likewise, the CBN held an OMO auction this week, offering participants instruments worth NGN300.00 billion – NGN75.00 billion for the 97-day, NGN75.00 billion for the 181-day, and NGN150.00 billion for the 363-day bills.
The subscription level at the auction settled at NGN414.20 billion (bid-to-offer: 1.4x), with the eventual allotment amounting to NGN357.20 billion – NGN22.00 billion for the 97-day, NGN35.20 billion for the 181-day and NGN300.00 billion for the 363-day – at respective stop rates of 10.50%, 14.00% (previously: 12.00%), and 17.75% (previously: 15.00%).
Next week, following expectation of a possible liquidity deficit, we envisage reduced demand for instruments in the Treasury bills secondary market. Thus, we believe yields will likely trend higher.
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