Investors Trim interest in Treasury Bills, Yield Jumps
The average yield on Nigerian Treasury bills rose in the secondary market as portfolio holders, investors adjusted their positions downward. The risk off sentiment culminated from the need for liquidity while inflation continues to damage market returns.
Most of the Treasury bills sales occurred at the belly of the curve, according to traders, while investors showed interest in short duration.
But funding levels improved slightly, causing money market rates to diverge yesterday. The overnight lending rate contracted by 8 basis points to 32%, according to data from FMDQ Securities Exchange quoted by analysts in their separate update. The open repo rate printed at 31.32% in the money market.
The absence of significant inflows into the system has lifted the funding rate above 30%, a development supported by monetary policy rate hikes this year. Despite the fact that real return, interest yield is exposed to inflation, the market continues to rally.
Investors are pumping funds into naira assets due to a dearth of alternative investors’ options except the riskier equities market. In 2024, the Central Bank of Nigeria (CBN) lifted spot rates at various primary market auctions it has conducted.
The apex bank has been using higher rates to lure foreign investors into the economy. The spot rate on OMO bills crossed 22% yesterday, though Treasury bills have seen much more. >>> Investors Get 21.50% Interest Rate on OMO Bills
Yesterday, Nigerian Treasury bills trading activity in the secondary market was bearish due to risk off sentiment triggered by uncertainties in the macroeconomic space. The average yield expanded by 8 bps to 21.8%.
Traders said the average yield pared at the short (-1bp) end following buying interest in the 8-day to maturity (-2bps) bills but expanded at the mid (+30bps) segment due to sell pressures on the 148-day to maturity (+150bps) bill.
Elsewhere, the average yield was unchanged at the long end. Conversely, the average yield dipped by 1 bp to 21.5% in the OMO segment.#Investors Trim interest in Treasury Bills, Yield Jumps
