Bond Falls after CBN Sold 364-Day Bills at 14.84%

Bond Falls after CBN Sold 364-Day Bills at 14.84%

Trading activities in the secondary market space ended on a mixed note after the Central Bank of Nigeria (CBN) offered investors higher spot rates at the primary market auction conducted midweek.

The CBN sold Treasury bills at the primary market auction at higher stop rates. The 364- day bill’s stop rate increased to 14.84% (from 13.99%), while the 90-day and 180-day bills remained sticky at 6.50% and 8.05%, respectively.

Meanwhile, the average yield on the Federal Government of Nigeria slides amidst bullish momentum that started following monetary policy rate hikes this week. Though, FGN bonds price were relatively steady despite yield moderation.

MarketForces Africa noted that the average yields across the market have been on pendulum swings as market participants begin to weigh their investing positions against rising inflation, and a higher interest rate environment.

Pressures on short-term rates eased on Thursday in the absence of liquidity tightening that has persisted in the money market due to low maturities of government instruments that could trigger inflows into the financial system.

Data from FMDQ Exchange platform show that the Open Buyback Rate (OPR) declined to 9.63% on Thursday as liquidity in the financial system improved. Also, the Overnight Lending Rate fell by 738 basis points to 9.88%. READ: Debt Investors See Mixed Yields Ahead of DMO, CBN Auctions

Trading activities in the Treasury bills secondary market were mixed, albeit with a bearish tilt, as the average yield inched higher by a basis point to 10.62%, according to traders’ notes. 

Across the curve, Cordros Capital analysts said the average yield was flat at the short and long ends.  Yield expanded at the mid (+2bps) segment following the sell-off of the 112-day to maturity (+17bps) bill.

Elsewhere, fixed income market analysts reported that the average yield remained at 10.2% in the OMO bills segment.

In the bond market, the values of plain vanilla FGN Bonds were unchanged for the majority of maturities tracked by Cowry Asset Management despite the average secondary market yield contracting by 0.06 percentage points to 14.39%.

Across the benchmark curve, the average yield declined at the short (-14bps) and long (-4bps) ends as investors demanded the MAR-2024 (-82bps), and JUL-2045 (-14bps) bonds, respectively.

Analysts noted that local bond investors played around the back end of the yield curve with a bullish tilt which saw an increase in price across mid to short-term tenored buckets.

Reflecting investors’ sentiments, the value of the FGN Eurobond increased for all maturities as bondholders switch to buying sentiment. Hence, the average yield compressed by 0.11 percentage points to 11.66%. # Bond Falls after CBN Sold 364-Day Bills at 14.84%

Previous articleSouth Africa Hikes Benchmark Repo Rate to 7%
Next articleGCR Downgrades FSDH Merchant Bank as Capital Moderates
MarketForces Africa, a Financial News Media Platform for Strategic Opinions about Economic Policies, Strategy & Corporate Analysis from today's Leading Professionals, Equity Analysts, Research Experts, Industrialists and, Entrepreneurs on the Risk and Opportunities Surrounding Industry Shaping Businesses and Ideas.