Yields Ease as Investors Increase Bets on Nigerian Treasury Bills
The average yield on Nigerian Treasury bills fell slightly as investors increased bets on the naira asset in the secondary market following a disinflation-driven boost to real returns.
Excess liquidity of about N5 trillion in the financial system is expected to boost Treasury bills bets in the secondary market in the absence of a midweek auction, Broadstreet analysts said in a chat with MarketForces Africa.
Fixed-income market analysts said transactions were mostly concentrated in short- and long-duration bonds as investors continue to lock in yields following a negative signal from the results of the recently completed bond auction.
The Debt Management Office (DMO) reduced the spot rates on reopened bonds, which was interpreted as a possible repricing that could extend into the Central Bank’s treasury bills operation.
An expanded real return on investment enabled the authority to reduce premia on the naira-denominated investment instrument, especially given the expectation that retail investors would flood OMO bill auctions once restrictions were lifted.
According to CardinalStone Securities, the market recorded slight yield contractions in the short (-1 bp) and long (-2 bp) segments of the curve due to buying interest.
Fixed-income market analysts said demand was primarily concentrated in the 12-Aug Treasury paper and the 29-Dec OMO bill, while the discount rate on the 12-Aug NTB compressed further to 17.30%.
Overall, market activity was healthy, with a considerable number of trades executed during the session, fixed income market analysts at AIICO Capital Limited said in a note.
Consequently, the average yield declined by 1bp to 18.60%.
Treasury Bills are expected to maintain a similar trading pattern, with investors likely to focus on longer-dated instruments offering attractive yields.
Rates are expected to decline in the absence of an OMO auction this week, Herwood Securities Limited anticipates. Nigerian Treasury Bills Yield Rises on Pre-Inflation Portfolio Reshuffles
