Discount Rates on T-Bills Eased as Fixed Income Market Trades Soft

Discount Rates on T-Bills Eased as Fixed Income Market Trades Soft

Discounts rates on Nigerian Treasury Bills (T-Bills), open market operations (OMO) bill eased as the fixed income market trade soft amidst sustained policy direction.

In the money market, funding pressures also eased as financial system liquidity opened higher at N328.2 billion from N87.6 billion previously.

This was driven by OMO inflows estimated at N169.2 billion. Against this backdrop, the Open Buy Back (OBB) and Overnight (O/N) rates declined by 5.7% and 5.8% to 6.33% and 7.17% respectively.

On Tuesday, analysts at Chapel Hill Denham noted the Nigerian fixed income market traded largely flattish in view of uncertainty in monetary policy.

In the bills market, discount rates on the Nigerian Treasury Bill and OMO benchmark curves eased by an average of 6 basis points (bps) and 5bps to 3.82% and 6.10% respectively.

However, the benchmark bond yield curve expanded by a marginal 1bp, as upward repricing at the short end of the curve (+8bps to 8.21%) was largely offset by few interest at the long end of the curve (-3bps to 11.67%).

Given the hawkish tilt of the MPC at the committee meeting which held last week, we expect the duration apathy in the bond market to persist over the near term, Chapel Hill Denham said.

Analysts expect a rollover Nigerian Treasury Bill auction is scheduled to hold on Wednesday, with N95.7bn on offer, across 91-day (N10 billion), 182-day (N17.6 billion) and 364-day (N68.1 billion) tenors.

Recalled that the last auction cleared at 2.0%, 3.5% and 7.0% respectively as analysts expect the upcoming auction to clear slightly higher.

In the Investors and Exporters Window, the Naira strengthened further against the USD, albeit marginally by 3bps or 13 kobo to 409.00. In the parallel market, the local currency weakened by 1.00 or 0.2% against the USD to 485.00.

However, the foreign exchange rate remained unchanged in the official and Secondary Market Intervention Sale (SMIS) segments at 379.00 and 380.69 respectively.

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External reserves maintained the recent upward trend, strengthening marginally by 0.6% above the previous week to US$34.8 billion.

Discount Rates on T-Bills Eased as Fixed Income Market Trades Soft