FGN Bonds, T-Bills Face Sell Pressures as Liquidity Drops
The average yield on Nigerian Treasury bills surged marginally, but the movement remains unnoticeable amidst a sustained increase headline inflation rate, which failed to be curbed by monetary policy tightening. Fixed interest securities investors continue to search for a market catalysts to drive yield repricing, though, spot rates at the CBN auction continue to fluctuate.
The selloff on Nigerian treasury bills was supported by declining liquidity in the financial system yesterday, the same pattern of trading flows was seen in the secondary market for FGN bonds.
Analysts said some banks pushed out assets in order to reboot their liquidity requirement after a significant slow in borrowing from the Central Bank of Nigeria’s standing lending facility.
Data from the FMDQ Exchange showed that the overnight lending rate expanded significantly, following the debits for the FGN bond auction worth N230.26 billion.
Short-term benchmark rates: the open repo rate and the overnight lending rate, surged to 19.06% (up from 7.30%) and 19.64% (up from 8.40%), respectively, Cowry Asset said in its market update.
Meanwhile, the Nigerian Interbank Treasury Bills True Yield (NITTY) displayed upward movements for most tracked tenors, even as the average secondary market yield on T-bills closed higher at 7.31%.
Across the curve, Cordros Capital said the average yield was unchanged at the short and mid segments but expanded at the long (+10bps) end due to sell pressures on the 344-day to maturity (+126bps) bill.
Elsewhere, the average yield was flat at 11.8% in the OMO segment while FGN bond market, most maturities remained largely stable in the over-the-counter bond market. Nevertheless, the average secondary market yield slightly increased to 13.30%, attributed to profit-taking across short- and long-dated maturities.
Yields for the 10-year, 20-year, and 30-year bonds remained steady at 13.63%, 14.90%, and 15.30%, respectively. FGN Eurobonds experienced appreciation across all tracked maturities, leading to the average secondary market yield contracting to 11.60%.
Across the benchmark curve, fixed income market analysts at Cordros Capital said the average yield increased at the short (+15bps) and long (+6bps) ends as market participants sold off the MAR-2027 (+55bps) and APR-2049 (+41bps) bonds, respectively. Conversely, the average yield was flat at the mid-segment. #FGN Bonds, T-Bills Face Sell Pressures as Liquidity Drops Naira Steadies as Banks Issue Update on FX Purchase