SAT JAN 25 2025-theGBJournal| The Treasury bills secondary market traded with bullish sentiments this week as market participants sought to fill unmet bids from the NTB PMA.
The average yield declined by 38bps to 26.2%. Across the market segments, the average yield declined by 38bps to 24.8% in the NTB market, while it declined by 31bps to 28.0% in the OMO market.
At Wednesday’s NTB auction, the Debt Management Office (DMO) offered bills worth N530.00 billion – N50.00 billion for the 91D, N80.00 billion for the 182D, and N400.00 billion for the 364D bills.
Subscription level settled significantly higher at N2.54 trillion (previous auction: N1.52 trillion), with a bid-to-offer ratio of 4.8x (previous auction: 3.0x).
The auction closed with the DMO allotting N756.01 billion – N26.45 billion for the 91D, N17.09 billion for the 182D, and N712.48 billion for the 364D papers – at respective stop rates of 18.00% (unchanged), 18.50% (unchanged) and 21.80% (previous: 22.62%).
We expect the liquidity surfeit in the system next week to boost demand for bills, causing yields in the T-bills secondary market to decline.
Meanwhile, the overnight (OVN) rate declined by 525bps w/w to 27.5% as inflows from FGN bonds coupons (N499.41 billion) offset debits for net NTB issuances (N226.01 billion) and FX sales.
As a result, the average liquidity short position moderated to NGN23.68 billion (vs a net short average of N145.29 billion in the previous week).
In the absence of any significant mop-up activity by the CBN, we expect the inflows from OMO maturities amounting to N335.00 billion to support system liquidity and drive down the OVN rate.
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