Buying Interest Drags Yield on T-Bills Lower by 16bps

The average yield on Nigerian Treasury bills shrank by 16 basis points to 15.2% as proceedings at the secondary market ended positive. Funds/asset managers positioned to ramp up short-term borrowing instruments dragged the yield curve downward amidst an expectation that spot rates would decline at the Central Bank of Nigeria’s primary market auction.

Broadstreet experts told MarketForces Africa that at 19%, there is less the monetary authority would do on rates repricing without pushing its balance sheet funding costs higher. Analysts explained in a chat with MarketForces Africa that higher rates on government borrowing instruments is a disincentive for banks to lend to the real sector of the economy.

In the money market, short-term benchmark interest rates spiked as liquidity pressures returned. The overnight lending rate expanded by 19 basis points to 16.3%, Cordros Capital Limited said in a market update.

The funding rates surge on low records of inflows from maturing instruments or coupon payments. Trading in the Treasury bills secondary market was bullish, as the average yield contracted by 16 basis points to 15.2%, Cordros Capital Limited told investors in a note.  Banks Face Risks over 24hrs FX Positions Sell Down

Across the curve, the average yield dipped at the short (-57bps) and mid (-1bp) segments following interests on the 9-day to maturity (-427bps) and 177-day to maturity (-1bp) bills, respectively, but closed flat at the long end. Similarly, the average yield dipped by 5 basis points to 17.9% in the OMO bills segment.

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