…DMO offered instruments worth NGN150.00 billion to investors
SAT SEPT 28 2024-theGBJournal| The Treasury bonds secondary market closed trading week on Friday with bearish sentiments dominating, as players exited their positions in anticipation of higher yields due to the increased policy rate.
Subsequently, the average yield inched higher by 8bps to 18.7%.
Across the benchmark curve, the average yield expanded at the short (+22bps), mid (+12bps) and long (+5bps) segments, specifically as investors sold off the MAR-2025 (+102bps), FEB-2031 (+38bps) and MAR-2050 (+45bps) bonds, respectively.
At Monday’s PMA, the Debt Management Office (DMO) offered instruments worth N150 billion to investors through re-openings of the 19.30% FGN APR 2029 (Bid-to-offer: 0.3x; Stop rate: 19.00%), 18.50% FGN FEB 2031 (Bid-to-offer: 1.1x; Stop rate: 19.99%), and 19.89% FGN MAY 2033 (Bid-to-offer: 11.3x; Stop rate: 20.05%) bonds.
Total subscription level settled at N414.89 billion (previous: 460.18 billion), with a bid-to-offer ratio of 2.8x (previous: 2.4x).
Eventually, the DMO allotted instruments worth N264.55 billion across the three tenors, resulting in a bid-to-cover ratio of 1.6x.
”Local participants in the Treasury bonds secondary market will continue to reprice yields higher to reflect the elevated benchmark interest rate,” says analysts.
In the medium term, expectation of elevated yields remains, consequent to anticipated monetary policy administration globally and domestically, and sustained imbalance in the demand and supply dynamics.
Meanwhile, having stayed depressed at c. 20.0% levels for most of the week, the overnight (OVN) rate at the money market eventually closed the week higher at 30.0% (+5bps w/w), as liquidity pressures at the end of the week alongside debits for the FGN bond PMA (N264.53 billion) and OMO (N252.90 billion) auctions outweighed the sizeable inflows from FAAC disbursements (N828.08 billion) and FGN bond coupon payments (NGN273.43billion).
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