T-Bills Yield Dips Ahead of Bond Auction as Naira Steadies
Ahead of Debt Management Office bonds auction on Wednesday, the average yield on Nigerian Treasury Bills slowdown 3 basis points on Tuesday as Naira firmed up against the United States dollar at the Investors and Exporters foreign exchange window.
At the Investors window, Naira remained unchanged at ₦415.10 as most participants maintained bids between ₦404.00 and ₦453.75 per dollar, according to FSDH Capital amidst inflation rate moderation.
Debt Management Office (DMO ) is scheduled to offer FGN bond worth ₦150 billion through re-opening of 10-year (₦50 billion), 20-year (₦50 billion), and 30-year (₦50 billion) tenors, and the settlement will take place on November 19, 2021.
Some analysts maintain expectations that the bond auction will be oversubscribed due to a healthy liquidity position and lack of alternative high yield investment options.
Meanwhile, there was mild liquidity strain in the money market today as short term rates faced moderate pressure. Alpha Morgan Capital hinted that the average interbank rate climbed 25 basis points to 13.75% following an increase in the Open Buy Back and Overnight rates.
Data from FMDQ Exchange shows that the overnight (O/N) rate increased by 0.25 percent to close at 14.00 percent as against the last close of 13.75 percent, and the Open Buy Back (OBB) rate also increased by 0.25 percent to close at 13.50 percent compared to 13.25 percent on the previous day.
Despite open market operations (OMO) repayment of ₦70.50 billion, the money market rates are likely to remain elevated in the near term, FSDH Capital projected.
In the secondary market, Nigerian Treasury bills traded on a calm but bullish note as average yield across the curve decreased by 3 bps to close at 5.15 percent from 5.18 percent on the previous day.
Average yield across the long-term maturities declined by 5 basis points, according to various analysts notes. However, the average yields across short-term and medium-term maturities remained unchanged at 3.70 percent and 4.62 percent, respectively.
FSDH Capital spotted that Nigerian Treasury Bills 25-Aug-22 (-53 bps) maturity bill witnessed buying interest, while yields on 19 bills remained unchanged.
In the OMO bills market, the average yield across the curve decreased by 4 basis points to close at 5.47 percent as against the last close of 5.51 percent. Similarly, average yield across the short-term maturities declined by 6 basis points.
However, the average yields across medium-term and long-term maturities remained unchanged at 5.53 percent and 6.05 percent, respectively.
Open market operations bills 4-Jan-22 (-61 bps) maturity bill witnessed buying interest, while yields on 16 days to maturity bills remained unchanged.
Elsewhere, Federal Government (FGN) bonds secondary market closed on a mildly negative note today, as the average bond yield across the curve cleared higher by 1 basis point to close at 8.46 percent from 8.45 percent on the previous day.
Analysts’ notes show that average yields across the medium tenor and long tenor of the curve increased by 3 basis points and 2 basis points, respectively.
However, the average yield across the short tenor of the curve remained unchanged, said FSDH Capital analysts.
The 27-MAR-2050 maturity bond decrease in the yield by 6 bps, while the 18-JUL-2034, 27-MAR-2035, and 18-MAR-2036 maturity bonds were the worst performers with an increase in yield of 7 basis points each.
At the Eurobond market, trading activities ended on a bearish note following selling pressure across the sovereign. Alpha Morgan Capital analysts said in a note that the average yield climbed by 5 basis points to close at 6.72%. # T-Bills Yield Dips Ahead of Bond Auction as Naira Steadies
Read Also: Treasury Yield Steadies as Fixed Income Market Keeps Low Rates
