Average Yield on Treasury Bills Closed Flat at 1.45%

Average Yield on Treasury Bills Closed Flat at 1.45%

To end the week, average yield on Nigerian Treasury bulls closed flat at 1.45% following a bearish trade session in the fixed income market segment.

The financial system liquidity tightened was however tightened on Friday, opened lower at N207.6 billion from N582.8 billion yesterday.

Chapel Hill Denham said this resulted from a series of debits which hit the system, including settlement of the monthly bond auction – worth N206.5 billion, debit for OMO auction valued at N180.0 billion – yesterday, and provisioning for the retail FX auction.

Against this backdrop, the Open Buy Back (OBB) and Interbank (O/N) rate expanded by 16.5 and 16.7 percentage points to 20.00% and 20.50% respectively.

“We expect system liquidity to improve next week, based on anticipated disbursement of February FAAC allocation and OMO maturities totaling N472.42bn”, Chapel Hill Denham said.

Following the fresh supply of OMO bills yesterday, the OMO benchmark curve expanded by an average of 11 basis points (bps) to 6.02%.

Meanwhile, the Nigerian Treasury Bills curve was flat at an average of 1.45%.

However, the bond market yields expanded by an average of 11bps to 10.18% across the benchmark curve.

Analysts at Chapel Hill Denham attributes this to repricing at the short (+16bps to 7.97%), intermediate (+8bps to 10.53%) and long (+11bps to 11.01%) end of the curve.

“Investors will be looking forward to the NTB auction holding next week to gauge the CBN’s views on the level of short term rates, particularly as the bond yield curve remains very steep”, analysts said.

Also, the CBN, on behalf of the DMO, is expected to offer a total of N128.2 billion across three tenors: 91-day (N20.37 billion), 182(N55.85 billion) and 364-day (N52.0 billion).

The previous auction cleared at 1.0%, 2.0% and 4.0% respectively, analysts said odds are in favour of higher stop rates on Wednesday.

Yield Stays Flat on Subdued Appetite in T-Bills Market

In the currency market, the naira remained unchanged at the official and SMIS windows at N379.00 and N380.69 respectively.

In the I&E Window, the Naira weakened against the greenback by 0.54% to 410.00, but traded flat in the parallel market (at 478.00) as of writing.

Average Yield on Treasury Bills Closed Flat at 1.45%