SAT AUG 31 2024-theGBJournal|Trading in the Treasury bills secondary market maintained its bullish trend from prior weeks, as investors repriced long-dated papers after the CBN’s recent circular on the operationalisation of the SDF and SLF funding rates led to an effective reduction in SDF rates.
Thus, the average yield across all instruments contracted by 148bps to 21.8%. Across the market segments, the average yield declined by 111bps to 21.2% in the NTB segment and dipped by 223bps to 22.9% in the OMO segment.
The CBN conducted two OMO auctions during the week, which was met with significant interest. The total subscription level at the first auction was N891.46 billion (July: N86.50 billion) as the apex body offered instruments worth N500.00 billion (July: N150.00 billion).
Eventually, the CBN allotted N869.46 billion – N5.00 billion for the 92-day, N10.00 billion for the 176-day, and N854.46 billion for the 358-day at respective stop rates of 18.5%, 19.3%, 21.9%.
At the second auction, participants were mostly interested in the 1-year bill offered, with zero interest recorded for the 91-day bill. The total subscription level printed N765.00 billion amid N1.85 trillion worth of bills on offer.
Accordingly, the CBN allotted N758.00 billion for the 364-day at a stop rate of 21.9%, while no sales were made on the 91-day and 175-day bills.
We expect next week’s NTB PMA (N233.31 billion worth of maturities on offer) to determine proceedings in the NTB market, with most participants anticipating a reduction in stop rates which should trigger a downward repricing of yields in the secondary market.
X-@theGBJournal|Facebook-the Government and Business Journal|email:gbj@govbusinessjournal.com|govandbusinessj@gmail.com
