SAT JUNE 22 2024-theGBJournal| The T-bills secondary market closed on a bearish note Friday, with most pressure on the 34DTM (+129bps) paper and a few long-dated bills.
Consequently, the average yield across all instruments advanced by 2bps to 21.9%. Across the market segments, the average yield expanded by 6bps to 22.0% at the NTB segment but contracted by 7bps to 21.7% at the OMO segment.
At this week’s OMO auction, the CBN offered instruments worth N500.00 billion – N75.00 billion of the 90-day, N75.00 billion of the 174-day, and N350.00 billion of the 363-day.
Notably, investors remained averse to the 90-day bill and largely focused on the 1-year bill (99.9% of the total subscription), with the aggregate subscription settling at N986.88 billion (bid-to-offer: 2.0x).
Eventually, the CBN filled all available bids – N1.00 billion for the 174-day and N985.88 billion for the 363-day instruments – at respective stop rates of 19.48% (previous: 19.64%) and 22.30% (previous: 22.34%).
Meanwhile, the overnight (OVN) rate contracted by 21bps w/w to 26.0%, as the healthy liquidity from last week, was further boosted by additional inflows from FAAC allocations (c. N600.00 billion), FGN bond coupon payments (N29.84 billion) and OMO maturities (N15.00 billion) amid debits for the mid-week OMO auction (NGN986.88 billion).
Nonetheless, banks accessing the Central Bank of Nigeria’s (CBN) SDF window caused the week’s average system liquidity to close at a net short position of N563.87 billion (vs net long position of N684.11 billion in the prior week).
Cordros Research analysts envisage the funding for next week’s June 2024 FGN bond PMA and a possible net issuance at the NTB auction would mount pressure on the financial system, more so as no notable inflows are expected.
Consequent to this, we expect the OVN rate to trend higher in the coming week.
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