Investors Intensify T-Bills Hunting Ahead of Rate Decision
Investors added more Nigerian Treasury bills to their respective portfolios via secondary market transactions ahead of the policy rate decision.
There is a mixed expectation that the Central Bank of Nigeria (CBN) monetary policy committee might cut rate to fuel economic growth, an expectation driven by sustained disinflation.
While inflation is on decline, benchmark interest rate has remained at double digit high of 27.50%- resulting to 7.38% real return on naira asset investments.
Ahead of the final decision, on the Nigerian benchmark interest rate, which will also take into consideration the monetary easing across the world, the Treasury Bills market was bullish as the average yield contracted by 7 bps to 18.41%.
Investors increased bets on Nigerian Treasury bill that is set to expire on 25-DEC 2025 and 03-SEP 2026. The bargain hunting dragged their respective yields down by 72 basis points and 55 basis points – the steepest decline in yield, CardinalStone Securities Limited reported.
Investors also showed interest in Nigerian Treasury bills, which will expire on 4 Dec—quoted at 17.78/17.17%. The 6-Aug bill also attracted interest. Moderate activity occurred on the OMO curve, particularly on the 7-Apr and 3-Mar tenors. Hence, average yield contracted by 4 bps to 22.0% in the OMO segment.
Across the curve, the average yield contracted at the short (-2 bps), mid (-11 bps), and long (-7 bps) segments, according to Cordros Capital. The yield contract was driven by the demand for the 80-day-to-maturity, 94-day-to-maturity, and 346-day-to-maturity papers, respectively.
Despite the ample system liquidity, cautious trading is expected to dominate as participants focus on MPC rate guidance, AIICO Capital Limited told investors in a note. #CBN Exposes Dollar Accounts to Exchange Rate Risks
