Benchmark Yield Falls as Nigerian Treasury Bills Rally
The average yield on Nigerian Treasury bills declined further ahead of the primary market auction on Wednesday. Local investors have continued to rally interest in short-term fixed-interest securities to balance their risk appetite amidst high inflation rate conditions.
The market has suffered from a steep rise in headline inflation for most of 2023, a development that toned down the real return on naira assets at a time when the local currency is falling unabatedly.
With a lower appetite for lending, deposit money banks have maintained a solid position, ramping up treasury instruments to augment loss earnings from asset creation.
Trading activities on short-term borrowing instruments in the secondary market closed mildly bullish, thus resulting in the average Treasury bills yield declining by 1bp to close at 10.49%.
Across the curve, Cordros Capital Limited told investors that the average yield was flat at the short end but declined at the mid (-1bp) and long (-1bp) segments.
Trader said this was due to demand for the 171-day to maturity (-1bp) and 325DTM (-2bps) bills, respectively. Elsewhere, the average yield dipped by 2bps to 14.6% in the OMO segment.
In the money market, short-term benchmark interest dropped as the liquidity level in the financial system improved further.
Data from FMDQ showed that open repo rate (OPR) and overnight lending rate (OVN), experienced downward trends on Monday, closing at 15.61% and 16.21%, respectively. Nigeria Eurobond Slumps after CBN Resumes OMO Auction
In the bond market, trading activity was bullish, as buy interest was observed at the longer end of the yield curve, thus dragging the average yield on FGN Bonds lower by 7bps to 15.62%.
