Treasury Bills Yields Pullback as Investors Increase Bets
The average yield on Nigerian treasury bills pulled backward in the secondary market due to increased demand amidst an expectation of interest rate hike. It is anticipated that the central bank will raise interest rates in an attempt to stabilize Nigeria’s dismal inflation rate, which was recorded at 31.70% in February.
Analysts claim that as the market waits for triggers to drive additional yield repricing, demand for Treasury bills was driven by the amount of funding available in the financial system. The central bank is expected to conduct primary market auction on Wednesday.
The auction is expected to attract market participants seeking to park funds in short term borrowing instruments. At the last auction sales, the apex bank allotted much lower than total subscriptions received, and spot rates were priced lower.
The buying momentum that resulted from the dynamics of the investment environment caused a slight decline in the average yield, which ultimately settled at 17.7%. The average yield shrank across the curve at the short (-2bps), mid (-2bps), and long (-3bps) segments, Cordros Capital Limited informed investors in its market update.
The decline was caused by demand for the 73-day to maturity (-2bps), 171-day to maturity (-3bps), and 332-day to maturity (-4bps) bills, respectively. According to the firm, the average yield in the secondary market’s OMO bill segment dropped by 3 basis points to 18.5%.
In the money market, the overnight lending rate contracted by 84 basis points to 26.5%, following inflows from FGN bond coupon payments worth N124.11 billion.
Information obtained from FMDQ securities exchnage revealed that interbank rates including the open repo rate (OPR) and overnight lending rate (OVN), nosedived to conclude at 26.22% and 27.29%, respectively. #Treasury Bills Yields Pullback as Investors Increase Bets
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