Investors Bet on Nigerian Treasury Bills Ahead of Inflation
Investors poured funds into Nigerian Treasury bills, though a relatively moderate trading activity was recorded in the fixed-income market ahead of the inflation figures release on Friday.
The market anticipates headline inflation to reflect the impact of Middle East tensions on global oil prices, with consumer price index estimates settling around 16%.
This is expected to impact spot rates on the naira asset after a series of downward repricing by the monetary authority in recent Treasury bill auctions.
The inflation surge and a stable benchmark interest rate will continue to reduce the real interest on investment in the fixed-income market, and analysts anticipate this will prompt investor reactions.
Debt market players maintained positions in Treasury bills on Thursday amid excess liquidity in the financial system, with banks continuing to search for investment alternatives to lending.
Moderate buying activity was noted across the curve. Hence, investors’ trading direction dragged the average yield lower by a basis point (1bp) to close at 17.46%.
Market activity remained subdued as investors maintained a cautious stance, resulting in limited trading interest across benchmark maturities.
Fixed income market analysts at AIICO Capital Limited told investors in a note that across the curve, discount rates on all tracked instruments remained flat – all papers held steady at their previous closing levels.
The firm said the absence of notable buying or selling pressure reflected balanced market positioning and muted investor sentiment during the session.
The market anticipates that investor activity will align with prevailing liquidity conditions, with keen interest in the 1-year paper. System liquidity opened at a moderately surplus balance of ₦5.29 trillion, a decline of ₦42.54 billion from the previous open of ₦5.32 trillion.
The liquidity level was largely supported by ₦5.06 trillion placements at the Central Bank window and a Primary Market Repayment of ₦237.42 million, with no recourse to the SLF window. First HoldCo: Weak Earnings, No Dividend Make Uncomfortable Shareholders
