OMO Bills Steadies as Fixed Income Securities Loses Attraction
The average yield on open market operations bills or OMO bills steadies on Tuesday as the Nigerian fixed income market loses its allures. Today, neither equity nor fixed income market delivered solid returns on investment as the financial market toughens up amidst liquidity pressure in the system.
Short term interest rate jerked upward overstrained in the financial system liquidity, analysts had predicted banks would sell down fixed income instruments to meet funding requirements.
There was a stronger outflow of funds in the financial system compared with the level of inflow seen, casting pressures on short term interest rates in the money market.
Consequently, the average interbank rate jerked up by 238 basis points to close November at 17.25% despite N54.30 billion inflow from OMO maturities inflows.
Data from FMDQ Exchange shows that the overnight lending rate increased by 2.50 per cent to close at 17.75 per cent as against the last close of 15.25 per cent.
Also, the Open Buy Back (OBB) rate increased by 2.25 per cent to close at 17.25 per cent compared to 15.00 per cent on the previous day. Money market rates are likely to remain elevated in the near term, FSDH Capital said in a note.
In the secondary market, trading activities on the Nigerian Treasury bills closed bullish with average yield across the curve decreasing by 6 basis points to close at 4.80 per cent from 4.86 per cent on the previous day.
Average yield across the long-term maturities compressed by 13 basis points, various analysts’ reports show. However, the average yields across short-term and medium-term maturities remained unchanged at 3.52 per cent and 4.30 per cent, respectively.
FSDH capital said in its market noted that the Nigerian Treasury Bills 13-Oct-22 (-114 bps) maturity bill witnessed heavy buying interest, while yields on 19 days to maturity bills remained unchanged.
In the OMO bills market, the average yield across the curve closed flat at 5.50 per cent, according to analysts note Average yields across short-term, medium-term, and long-term maturities remained unchanged at 5.36 per cent, 5.54 per cent, and 6.15 per cent, respectively.
FGN bonds secondary market closed on a positive note with the average bond yield across the curve cleared lower by 15 basis points to close at 8.00 per cent from 8.15 per cent on the previous day.
The average yield across the short tenor of the curve declined by 20 basis points. However, the average yields across medium tenor and long tenor of the remained unchanged.
The FGNSB 11-DEC-2022 bond was the best performer with a decrease in the yield of 79 basis points, while the FGNSB 13-FEB-2022 bond was the worst performer with an increase in yield of 3 basis points.
Furthermore, the secondary bond market is likely to remain subdued in the short term, according to FSDH Capital in a note. # OMO Bills Steadies as Fixed Income Securities Loses Attraction
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