Yields Squeeze as Nigerian Treasury Bills Rally on Month-End Buying
Nigerian Treasury bills rally in the secondary market on month-end buying fuelled by switching sentiment. Investors stepped up buying activities ahead of fourth quarter primary market auction and expectations that the recent interest rate cut will affect spot rate pricing.
Since inflation began to recede, the average return on Nigerian Treasury bills has been fluctuating to reflect the current market conditions. Liquidity level in the financial system has supported the rally. In the absence of funding pressures in the money market, banks have stayed glued to their holdings.
On Monday, the Treasury bills opened the week on a mixed note in the secondary market. This was spurred by more than N5 trillion liquidity in the financial system.
Hence, yields on select maturities declined by 3 bps, while mild profit-taking lifted the 03 Sept 2026 paper by 18 bps, fixed income market analysts reported.
At the close of the trading session, the average yield contracted by 1bp to 18.0%, according to Cordros Capital Limited.
Market analysts reported that across the curve, the average yield contracted at the short (-5 bps) and mid (-3bps) segments. The yield contraction was driven by the demand for the 87-day to maturity bills (-25bps) and 178-day to maturity (-3bps) bills, respectively.
However, yield expanded at the long (+3 bps) end, driven by profit-taking activities on the 325-day to maturity (+41 bps) bill. Similarly, the average yield contracted by 4 bps to 21.6% in the OMO segment.
Analysts said activities are expected to align with the prevailing ample system liquidity and outcome of the bond auction result. #Yields Squeeze as Nigerian Treasury Bills Rally on Month-End Buying
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