Bonds Cleared Lower as Yields on Treasury, OMO Bills Steady
Average yields on Treasury and Open Market Operations bills remained unchanged amidst cold and quiet trading activities in the secondary market. However, the average yield on bonds cleared lower as the equity market recovered from selling rallies.
Following a decline in spot rates on 182-day and 364-day treasury bills at the Central Bank auction midweek, yields on T-Bills had reacted as demand spiked on Thursday when investors seek to fill unmet subscriptions.
With slowdown seen in the space, yields on Treasury and OMO bills steady as financial system liquidity strained. Thus, the interbank rate sees an upward adjustment following an increase in open buy back and overnight lending rates.
Today, the overnight (O/N) rate increased by 3.50 per cent to close at 17.75 per cent as against the last close of 14.25 per cent, and the Open Repo (OPR) rate increased by 3.75 per cent to close at 17.50per cent compared to 13.75per cent on the previous day, according to note from FSDH Capital.
Some fixed income analysts note shows that in the secondary market, trading activities in the Nigerian Treasury bill closed on a flat note with the average yield across the curve remaining unchanged at 4.49 per cent.
Average yields across short-term, medium-term, and long-term maturities closed flat at 3.52 per cent, 3.74 per cent, and 5.18per cent, respectively, according to various analysts notes.
In the OMO bills market, the average yield across the curve closed flat at 5.48 per cent. Average yields across short-term, medium-term, and long-term maturities remained unchanged at 5.47 per cent, 5.51 per cent, and 5.54 per cent, respectively.
Yesterday, the CBN held an OMO auction on December 9, selling bills worth ₦30.00 billion across the 103-day (₦5.00 billion), 173-day (₦5.00 billion), and 348-day (₦20.00 billion) tenors.
Stop rates remained unchanged at 7.00per cent, 8.50per cent, and 10.10 per cent, respectively. The auction was oversubscribed, indicating a subscription level of 249 per cent (₦74.78 billion).
Demand was skewed towards long tenor maturity bills with bid-to-cover ratios settling at 1.80x (103-day), 2.16x (173-day), and 2.75x (348-day), FSDH Capital said.
In the bonds secondary market, FGN bonds closed on a mildly positive note today, as the average bond yield across the curve cleared lower by 1 basis point to close at 8.04 per cent from 8.05 per cent on the previous day.
Average yield across the long tenor of the curve decreased by 2 basis points. However, the average yields across short tenor and medium tenor of the curve remained unchanged.
Analysts notes show that the 24-JUL-2045 maturity bond was the best performer with a decrease in the yield of 5 basis points.
Going into next week, the secondary bond market may remain subdued as investors are expected to focus on the primary market auction, FSDH Capital predicted. # Bonds Cleared Higher as Yields on Treasury, OMO Bills Steady
