SAT MARCH 15 2025-theGBJournal| The Treasury bills average yield declined by 1bp to 20.7%. Across the market segments, the average yield was flat at 19.2% in the NTB segment but declined slightly by 3bps to 22.4% in the OMO segment.
The Treasury bills secondary market was mixed this week as market participants shifted focus to the primary market auction.
At Wednesday’s NTB auction, the DMO offered bills worth N550.00 billion – N70.00 billion for the 91D, N80.00 billion for the 182D, and N400.00 billion for the 364D bills. Subscription level settled lower at N1.27 trillion (previous auction: N1.92 trillion), with a bid-to-offer ratio of 2.3x (previous auction: 3.0x).
The auction closed with the Debt Management Office (DMO) allotting N678.76 billion – N34.72 billion for the 91D, N36.23 billion for the 182D, and N607.80 billion for the 364D papers – at respective stop rates of 17.00% (unchanged), 17.79% (previous: 17.75%) and 18.39% (previous: 17.82%).
Notably, the DMO revised the Treasury bills Q1 auction calendar, scheduling an NTB PMA next Wednesday (March 19), with NGN800.00 billion worth of bills on offer.
Next week, following our projections of liquidity dearth in the financial system, we expect yields in the treasury bills secondary market to rise.
Similarly, investors took a cautious stance in the FGN bond secondary market as the limited bids matched offers. Accordingly, the average yield increased by 1bp to 18.5%.
Across the benchmark curve, the average yield increased at the short (+4bps) and mid (+12bps) segments following selloffs of the JUL-2030 (+33bps) and FEB-2031 (+12bps) bonds, respectively. The average yield closed flat at the long end.
In the coming week, we anticipate a decline in yields driven by expectations of reinvestment of coupon inflows. Over the medium term, we still expect a moderation in yields consequent on the (1) anticipated monetary policy administration and (2) demand and supply dynamics.
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