Bonds, Treasury Bills Trade Quiet Ahead of CBN Decision
Bonds and Treasury bills yield steady as the market awaits the central bank of Nigeria’s decision on key policy rates. After the completion of the monetary policy committee meeting on Tuesday, the market is still waiting to gain insight into policy rates that will define the market operation and rates pricing for the next two months.
The average yield on Nigerian Treasury bills pared a basis point to 6.8% ahead of the primary market auction. Across the curve, the average yield closed flat at the short and mid segments but contracted at the long (-2bps) end as market participants demanded the 296-day to maturity (-44bps) bill.
Consequently, proceeding on FGN bond was quiet for most maturities, even as the average yield on the secondary market remained unchanged at 14.00%.
The 10-year FGN bond was 29 basis points richer, up by 10 basis points to 12.55%. The 15-year, 20-year, and 30-year FGN bonds yields held steady at 14.81%, 15.58%, and 15.77%, respectively, Cowry Asset Management said in a market brief.
Across the benchmark curve, Cordros Capital Limited told investors that the average yield expanded slightly at the short (+1bp) end following the sell-off of the MAR-2027 (+10bps) bond. Conversely, the average yield was flat at the mid and long segments, fixed income securities analysts said in the market note.
Elsewhere, the value of the FGN Eurobond cleared higher for most of the maturities amid sustained bullish sentiment; consequently, the average secondary market yield decreased to 12.22%. Meanwhile, liquidity level in the financial system improved on Tuesday and short-term benchmark interest rates spiraled downward in the absence of funding pressures.
Data from FMDQ Exchange showed that the overnight lending rate contracted by 213 basis points to 11.5%. In its market note, Cowry Asset reported that the Nigerian Interbank Borrowing Rate (NIBOR) nosedived across the board for all maturities tracked.
Deposit money banks with liquidity requested lower rates to free their fund. Withdrawals from the Central Bank of Nigeria’s standing lending facility slowed down significantly.
Short-term benchmark rates, such as the open repo rate and the overnight lending rate moderated to 11.00% (from 12.88%) and 11.55% (from 13.63%), respectively. #Bonds, Treasury Bills Trade Quiet Ahead of CBN Decision Naira Steadies as Banks Issue Update on FX Purchase