Fixed Income Investors Lock in Yields Ahead of CBN Auction
The average yield on Nigerian Treasury bills declined as fixed income investors piled into positions ahead of the midweek auction, Broadstreet traders said.
With the intention of locking in yields, fixed-income market analysts said bargain hunting in naira assets was bolstered by excess liquidity in the money market.
The interbank market traded lower across all tenors on Tuesday, reflecting improved system liquidity. Funding rates were mixed, with the Overnight rate rising by 9bps to 22.18%, while the Open Repo rate remained unchanged at 22.00%.
Meanwhile, the Treasury Bills secondary market closed on a bullish note as buying interest drove yields lower across most maturities.
Broadstreet analysts reported that activity in the secondary Treasury bills market was largely bullish, particularly in the mid-segment (-15 bps) of the curve.
Fixed income market investors staked bets on the 10-DEC (-64 bps) and 17-DEC (-58 bps) contracts. Consequently, average yields on Nigerian Treasury bills moderated by 6bps, settling at 18.41%.
With the intention of locking in yields, bullish pre-auction activity was bolstered by expectations of a surge in inflation amidst significant excess liquidity in the money market.
The Central Bank of Nigeria will conduct a Nigerian Treasury bills auction on Wednesday with a N750 billion offer size available for subscription across standard tenors.
The Apex Bank intensified liquidity mop-up after selling OMO bills worth N2.5 trillion on Monday, and additioanl allotment totalling N1.1 trillion was sterilised from excess money market liqusity on Tuesday.
