SAT 12 JUNE, 2021-theGBJournal- Trading in the Treasury bills secondary market turned bullish this week following demand for the mid and long-dated OMO bills. We attribute this to the increased liquidity in the interbank market on Wednesday. Consequently, average yields across all instruments contracted by 13bps to 8.2%.
Across the market segments, the average yield at the OMO segment declined by 33bps to 9.7%. In contrast, average yields at the NTB segment sustained its bearish run and expanded by 10bps to 6.4%. Elsewhere, we highlight that CBN’s Special bills (+53bps to 9.7%) were keenly traded as some local banks sold off to the secondary market to ease funding pressures.
At the PMA, the CBN offered bills worth NGN91.27 billion with allotments of NGN5.06 billion of the 91D, NGN10.09 billion of the 182D and NGN164.11 billion of the 364D – at respective stop rates of 2.50% (previously 2.50%), 3.50% (previously 3.50%), and 9.64% (previously 9.65%).
Also, the CBN sold NGN20.00 billion worth of bills to market participants at this week’s OMO auction and maintained stop rates across the three tenors, as with previous auctions.
We still maintain our view of higher average yields on T-bills, considering the expected dearth in system liquidity.
Meanwhile, the overnight rate expanded by 768bps w/w to 22.9%, as debits for CRR, NTB net issuances (NGN79.22 billion), and CBN’s weekly auctions outweighed inflows from OMO maturities (NGN80.00 billion).
In the coming week, we expect the OVN rate to temper from current levels but remain elevated, as expected inflows from OMO maturities (NGN46.00 billion) may not be sufficient to offset funding pressures for the week.
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