Bonds, Treasury Bills Yields Mixed As Liquidity Surge

Bonds, Treasury Bills Yields Mixed As Liquidity Surge

The market recorded a relatively stable demand for fixed interest securities assets. As such, bonds and Treasury Bills yields moved in a mixed direction on Tuesday as improved liquidity in the financial system eased pressures on the market funding profile.

Yesterday, a healthy level of free funds in the market triggered an increase in demand for government borrowing instruments, as such, the yield curve backtracked from making a further uptrend.

Nigeria’s stubborn double-digit inflation rate has continued to make an uptrend in 2023 as monetary authority inflation fighting tools failed to achieve results. The Central Bank of Nigeria (CBN) has lost touch with price stability while the exchange rate has weakened significantly.

In the money market, liquidity level improvement has dragged short-term benchmark interest rates lower as banks escape the temptation of borrowing more from the CBN standing lending facility.

In its market report, Cowry Asset Managers said Nigeria Interbank Offer Rate (NIBOR) fell across the board for all maturities tracked as gauges of money market stress eased. Analysts said local deposit money banks with liquidity requested lower rates, a reversal from what the market experienced in the past weeks.

Notably, market analysts said a 3-month NIBOR rate decreased by 335 basis points, reaching 11.25%; market analysts said. There was an inflow of N40 billion from OMO maturities, boosting the liquidity level.


With the improvement in funding profile,  money market rates such as the open repo rate (OPR) and the overnight lending rate (OVN) crashed significantly to 2.50% (from 23.17%) and 3.10% (from 23.90%), respectively. 

Amidst negative on naira assets, Nigerian Treasury bills traded quietly. As a result, the average secondary market yield printed at 7.29%.  Similarly, the average yield was flat at 11.2% in the OMO segment. Nigeria Eurobond Slumps after CBN Resumes OMO Auction

In the bond market, the values of FGN bonds exhibited relative stability across most tracked maturities. Demand or Buying interest across mid- and long-dated securities, particularly in the 18 JUL 2034 bond, led to a contraction in the average secondary market yield to 14.35% (from 14.69%).

Additionally, the 10-year, and 30-year borrowing costs yielded around 14.26% from 14.28% and 15.40% from 15.45% respectively, Cowry Asset Managers said. Meanwhile, the 20-year paper held steady at 15.19.

Elsewhere, FGN Eurobonds were largely bullish for most maturities tracked, as the average secondary market yield closed lower at 10.96%. #Bonds, Treasury Bills Yields Mixed As Liquidity Surge Bonds Yield Rises 20bps amidst Mixed Expectations

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