Treasury, Bond Yields Stable as Market Eyes Auction
The average yield on Nigerian Treasury Bills and Federal Government (FGN) bonds were relatively steadied on Monday as market participants eye primary market auctions.
In the open market operations segment, OMO Bills however inched up while there were significant liquidity pressures in the financial system.
Short term rates jerked up due to funding pressures in the system ahead of expected foreign exchange auctions as banks face liquidity.
Data from the FMDQ Exchange platform shows that both overnight and open buyback rates were adjusted upward on Monday from single digit low.
The overnight lending rate expanded by 558 basis points to 11.3%, according to market data. At the investors’ and exporters’ foreign exchange window, the Nigerian local currency, naira, appreciated after hitting N419.50 on Friday.
Naira traded strong against the United States dollar, gaining 0.3% to close the Monday session at N417.30 at the official foreign exchange window.
Amidst relatively cold trading sessions in the fixed income market, trading activities in the Treasury bills’ secondary market were quiet.
This was attributed to market participants’ anticipation of Wednesday’s primary market auction to be conducted by the Central Bank of Nigeria.
Having stayed on the sideline, the average yield closed flat at 3.8%. Elsewhere, the average yield expanded by five basis points to 4.1% in the OMO segment.
Similarly, there was quiet activity in the Treasury bonds secondary market as investors switched their focus to the April bond auction in anticipation of higher-stop rates. Consequently, the average yield was unchanged at 11.0%, analysts at Cordros Capital told clients in an email.
