Nigerian T-Bills Yields Dip, Traders Anticipate Rates Repricing
The average yield on Nigerian Treasury bills declined slightly to 18.81% ahead of the midweek auction, traders said, with a monetary policy rate cut anticipated to fuel repricing across primary and secondary markets.
Inflation sustained its downward trend to 15.39%, and the benchmark interest rate, brought down to 23%, has sharply reduced real returns on debt capital market assets.
Market analysts expect spot rate adjustments to effectively reduce returns on Treasury bills, with repricing expected to begin at the primary market auction on Wednesday.
In the Treasury Bills market, yields were mixed across maturities, but strong investor demand and increased trading activity supported a bullish tone.
The soft bullishness in the secondary market dragged the average yield on Treasury bills lower by a basis point amid monetary policy easing.
Fixed-income market analysts reported that Treasury bill rates edged lower across the curve on a quiet day, as the market awaited the monetary policy committee’s decision on the benchmark interest rate.
The 91-day eased 0.01 percentage points to 18.07%, the 180-day to 19.18% and the 365-day to 19.72%, taking the average down 0.01 points to 18.81%, investment firms reported.
The Committee went on to cut the policy rate by 350 basis points to 23.00%. Rates remain above where they started the year, by 1.77, 2.48 and 0.13 percentage points respectively
The market expects Treasury bill rates to reprice lower in secondary trading and at the midweek auction, now that the policy rate is 23.00% and the deposit floor is 20.00%.
The Central Bank of Nigeria (CBN) is scheduled to auction N500 billion treasury bills on Wednesday across standard tenors.
Analysts said about N7 trillion in excess liquidity will influence subscription, and the latest benchmark interest rate will drag spot rates lower across tenors. CBN Tightens Market Liquidity, Mops Up N3trn in OMO Bills
