Gilt-edged Market Records Stable Rate on T-Bills ahead of CBN Auction
The gilt-edged market records stable average rate on Treasury Bills as the Central Bank of Nigeria (CBN) set to hold ₦50.9 billion Primary Market Auction (PMA) Wednesday.
Greenwich Merchant Bank stated that the uneventful trading session followed two-consecutive days of profit-taking on the 14-Oct-21 bill that elevated the average yield marginally.
The average rate was largely unchanged at 0.15% at the secondary Treasury Bills market, but average rate rose by 4 basis points (bps) to 0.43% in the secondary open market operations (OMO) segment.
Analysts attributed this to renewed investors’ apathy towards OMO instruments.
As with the OMO and NTB market, trading activities were slightly mixed in the bond segment, albeit with a bearish bias, due to investors’ apprehension towards long duration instruments.
Precisely, yields expanded by 12bps on average across the benchmark curve to close at 4.38%, owing largely to mid (+4bps to 4.38%), and long (+32bps to 6.36%) end of the curve.
It was noted that the short end contracted slightly by 1bp to an average rate of 1.38%
Today, funding pressures were mostly benign due to supportive system liquidity.
Read Also: Average Rate on Nigerian Treasury Bills Rises to 0.14%
Similarly, the financial system liquidity opened considerably higher at N530 billion from N245 billion yesterday.
The majority of this increase was spurred by a N280 billion OMO maturity that hit the financial system.
Thus the Open Buy Back (OBB) and Overnight (OVN) rates moderated by 59bps and 34bps to 0.83% and 1.33%, respectively.
The sizable liquidity kept a lid on funding rates with the Over Night rate and Open Buy Back easing to 1.3% and 0.8% respectively relative to 1.7% and 1.4%, their previous print.
For the rest of the week, analysts at Chapel Hill Denham said they expect buoyant system liquidity to continue to support the lower rates in the market.
At the PMA tomorrow, analysts expect strong bids to drive rates further south as the CBN rolls over all maturing bills across the 91-day, 182-day, and 364-day maturities worth ₦4.4bn, ₦7.8bn and ₦38.7bn respectively.
Market data showed that profit-taking strengthened in the Bond market amid mixed trading across the tickers.
The average yield thereby rose 12bps to 4.3% influenced by large sell-off (+126bps) on the 24-JUL-2045 instrument.
Across segments, market participants bought the short end of the market (-1bp) and sold off the belly (+11bps) and tail (+23bps).
