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Liquidity dearth pressures T-Bills market as average yield expanded by 22bps to 5.7%, overnight rate ends week -20 ppts lower

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SAT 10 APRIL, 2021-theGBJournal-As expected, the overall Treasury bills secondary market was bearish, following the liquidity dearth in the system. Thus, the average yield across all instruments expanded by 22bps to 5.7%.

Across the market segments, the average yield expanded by 33bps to 6.7% at the OMO secondary market and by 18bps to 4.3% at the NTB secondary market. At the OMO auction, the CBN sold NGN20.00 billion worth of bills to market participants and maintained stop rates across the three tenors, as with prior auctions.

In the coming week, we maintain our stance on higher average yield on T-bills, following the liquidity squeeze expected in the market. Also, we expect quiet trading at the NTB market as participants position for next week’s PMA, with NGN69.60 billion worth of maturities on offer.

The overnight (OVN) rate (-20 ppts to 12.5%) ended the week lower. Still, it remained elevated due to the reduced level of inflows from OMO maturities (NGN34.00 billion) amid significant funding pressures on the system for CBN’s weekly FX and OMO (NGN20.00 billion) auctions.

With NGN10.00 billion expected to come into the system from OMO maturities, we expect the OVN rate to stay elevated due to the impact of outflows for the week.

The overnight (OVN) rate (-20 ppts to 12.5%) ended the week lower. Still, it remained elevated due to the reduced level of inflows from OMO maturities (NGN34.00 billion) amid significant funding pressures on the system for CBN’s weekly FX and OMO (NGN20.00 billion) auctions.

With NGN10.00 billion expected to come into the system from OMO maturities, we expect the OVN rate to stay elevated due to the impact of outflows for the week.-with Cordros Research

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