Nigerian Treasury, OMO Bills Yields Rise Ahead of Auction
The average yield on Nigerian Treasury and OMO bills increased in the secondary market on the back of latest selloffs by some banks and other asset managers.
Traders noted that previous demand pressures eased on the last trading day, undermining the four consecutive days of bullish sentiments posted during the week.
As a result, the treasury bills market closed bearish week-on-week, the average yield across all instruments increased by 9 basis points to 25.9%, Cordros Capital Limited said in a note.
The investment firm’s analysts added that across the market segments, the average yield advanced by 4bps to 24.2% in the Nigerian Treasury bills segment and increased by 11bps to 26.2% in the OMO segment.
During the week, demand was seen across the curve, with maturities at the belly of the curve enjoying most of the traction. Market players cherry-picked at attractive levels on the back of improved liquidity conditions.
TrustBanc Capital Limited wrote that the 6-Mar and 10-Apr papers declined significantly, dropping by 46bps and 107bps, respectively. Despite the bullish bias, selling pressure was evident on the 6-Feb maturity.
Most of the interest was skewed to select maturities, particularly the February, March, April, May bills, and October 2025 papers, AIICO Capital Limited said in its note, ahead of auction.
The Central Bank of Nigeria (CBN) is scheduled to hold primary market auction midweek to with N513.43 billion worth of maturing Treasury bills on offer.
Fixed income market analysts are now expecting a cautious session until Wednesday, saying the results of the midweek Treasury bills auction will offer additional insight into the trajectory of rates.
In October, the CBN offered ₦456.6 billion in Nigerian Treasury bills across two auctions, reflecting a 26.7% month on month decline, Afrinvest Capital Limited said in a monthly report.
At the first auction, investor demand was robust at 3.3x vs ₦81.9 billion on offer across the three tenors. Specifically, demand skewed heavily towards the long end, with bids at 8.2x the offer, compared to 0.6x for the short-term and 0.2x for mid-term bills.
Consequently, the CBN sold 91-day bills worth ₦13.0 billion, 182-day bills totaling ₦3.9 billion and 364-day bills worth ₦65.billion to investors at 17.0%, 17.5%, and 19.9% respectively, with a mild decline in the stop rate on the long end from 20.0%.
In contrast, the final auction was marked by strong offers totaling ₦374.7 billion and more moderate demand at 1.3x of offer, reflecting the uniform demand sentiment across tenors.
The auction cleared at higher stop rates of 17.8%, 19.2%, and 26.0% for the 91-day, 182-day, and 364-day bills, respectively, as the CBN’s total allotment aligned with the total bids received. #Nigerian Treasury, OMO Bills Yields Rise Ahead of Auction FX Stability: CBN Sells 122.671m Dollars to 46 Authorised Dealers
