Buying Interest in Treasury Bills Drags Yield Below 8%

Buying Interest in Treasury Bills Drags Yield Below 8%

Buying interest across the Nigerian Treasury bill tenors dragged the benchmark yield below 8% in the secondary market ahead of the Central Bank primary market auction. On Wednesday, Nigeria’s debt management office is scheduled to conduct a primary market auction on behalf of the Central Bank to roll over the maturing bill.

Citing healthy liquidity in the financial system after large FAAC inflows, analysts have predicted that spot rates would drop further despite the stubborn inflation rate. Data from FMDQ showed that the overnight lending rate closed flat at 1.7%.

The market maintained a single-digit low rate as the system liquidity settled at a net long position of N510.01 billion. Ahead of the auction for tomorrow, analysts differ on subscription levels.

The recent auction received higher bids due to sizeable liquidity in the market, though some deposit money bank activities at the CBN standing lending facility surged. Majorly, tier-2 banks pitched tents at the CBN window to raise funds to support their respective liquidity positions.

At the secondary market yesterday, trading activities on Treasury bills closed on a bullish note. The average yield contracted by 29 basis points to 7.7%. It registered at 8.2% at the beginning of the week.

Across the curve, Cordros Capital said the average yield was unchanged at the short and mid segments. However, yield declined at the long (-51bps) end as market players demanded the 276-day to maturity (-161bps) bill.

Similarly, the average yield declined by 1bp to 12.1% in the OMO segment. Elsewhere, trading activities in the bond market ended on a mixed note. However, the average yield grew slightly by 1bp to 14.4%.

Across the benchmark curve, traders said the average yield expanded at the short (+4bps) and long (+1bp) ends as participants sold off the MAR-2024 (+52bps) and JUN-2053 (+7bps) bonds, respectively.

Conversely, the average yield contracted at the mid-segment due to buying interest in the APR-2032 (-4bps) bond, according to fixed income analysts at Cordros Capital Limited. #Buying Interest in Treasury Bills Drags Yield Below 8% Naira Devaluation Deepens Economic Crisis in Nigeria