SAT. 25 MARCH 2023-theGBJournal | The Treasury bonds secondary market traded with bullish sentiments Friday, as the average yield contracted by 8bps to 13.2%.
The market performance is attributed to the dual impact of increased liquidity from coupon payments, and investors’ compensating for lost bids from Monday’s PMA at the secondary market.
Across the benchmark curve, the average yield contracted across the short (-5bps), mid (-8bps), and long (-15bps) segments due to the demand on the APR-2023 (-36bps), APR-2032 (-15bps), and APR-2037 (-57bps) bonds, respectively.
At this month’s bond PMA, the DMO offered instruments worth N360 billion to investors through re-openings of the 13.98% FGN FEB 2028 (Bid-to-offer: 0.8x; Stop rate: 14.00%), 12.50% FGN APR 2032 (Bid-to-offer: 0.3x; Stop rate: 14.75%), 16.25% FGN APR 2037 (Bid-to-offer: 4.0x; Stop rate: 15.20%), and 14.80% FGN APR 2049 (Bid-to-offer: 3.9x; Stop rate: 15.75%) bonds.
Demand was lower across the four instruments as the total subscription level settled at N808.61 billion (vs N993.10 billion in the previous auction), with the DMO allotting bonds worth N563.36 billion (translating to a bid-to-cover ratio of 1.4x).
Activities in the Treasury bills secondary market continued on a bearish note this week, driven by the tight system liquidity. As a result, the average yield across the market expanded by 47bps to 5.7%.
Across the market segments, the average yield inched higher by 101bps to 4.0% in the OMO secondary market and increased by 44bps to 5.8% in the NTB segment.
At the money market, the overnight (OVN) rate expanded by 508bps w/w to 18.9%, following the lower liquidity in the financial system.
For context, the settlements for the FGN bond (N563.36 billion) and FX auctions outweighed the inflow from FGN bond coupon payments (N80.56 billion) this week. As a result, the average system liquidity closed lower at a net short position of N40.72 billion (vs a net long position of N379.15 billion in the previous week).
Twitter-@theGBJournal|Facebook-the Government and Business Journal|email:gbj@govbusinessjournal.ng| govandbusinessj@gmail.com
