Liquidity: Yield Rises as Banks, Investors Sell T-Bills
The average yield on Nigerian Treasury bills rose slightly in the secondary market as investors trimmed their portfolio holdings amidst quest for liquidity.
Liquidity in the financial system remained depressed in the absence of significant inflows after multiple primary market auctions in the previous week. The squeeze in funding profile has also drove short term interest rate above 31%.
Banks with cash needs were forced to make choice between borrowings from the Central Bank of Nigeria (CBN) or offload part of their short term investment securities.
The hard choice made Treasury bills target for liquidity conversion, pushing yield higher for most part of trading sessions this week.
In their separate market updates, fixed interest securities analyst said the treasury bills market had a mixed-to-bearish posture on Wednesday.
The market experienced selling interest in Jan, Feb, and Mar 2025 bills and mild buying interest observed in the 26 June paper, AIICO Capital Limited told investors via update.
Overall, the executed volumes were low. The bearish tilt however pushed the average yield higher by 16 basis points to 22.2%, according to Cordros Capital Limited.
Traders said across the curve, the average yield pared at the short (-1bp) and mid (-1bp) segments, driven by mild interest in the 85-day to maturity (-1bp) and 176-day to maturity (-1bp) bills, respectively.
Meanwhile, the average yield expanded at the long (+39bps) end due to profit-taking activities on the 295-day to maturity (+77bps) bill.
Conversely, the average yield contracted by 2bps to 23.4% in the OMO segment in the secondary market, Cordros Capital Limited told investors in its market update. Tinubu Inaugurates Sokoto-Badagry Coastal Highway Construction, August
