Investors Trim T-Bills Holdings, Yield Rises Ahead of Auction
With Nigeria’s damaging inflation conditions, the average yield on Treasury bills remained elevated, though interest yield on naira asset has continued to trend negative in the fixed income market.
In the secondary market, trading activities on Nigerian Treasury bills ended on a bearish note, though with minimal activity amidst two OMO auctions conducted by the Central Bank of Nigeria (CBN).
Investors, and other asset managers were noted to be engage in some portfolio rebalancing actions to optimise returns in the secondary market, with selloff on short dated bills and profit taking at the belly and long end of the curve.
Fixed income analysts at AIICO Capital Limited reported that average mid-rate increased by 44 basis points week on week to 20.20% on Friday.
Meanwhile, Cowry Asset Limited said in its note that Nigeria treasury true yield, NITTY, was in the mixed bag reflecting the expectation for Nigerian T-bills auction in the new week where higher rates and yields are expected at the primary market auction.
The average secondary market yield on T-bills rose due to bearish trading activities with most pressure on the 34-day to maturity whose yield surged by +129bps and a few long-dated bills.
Across the market segments, traders stated that the average yield expanded but contracted by 7 basis points to 21.7% at the OMO bills segment.
Based on our expectation of a possible liquidity dearth next week, we anticipate demand for instruments in the Treasury bills secondary market will likely weaken, causing yields in the market to rise further.
The CBN will conduct primary market where it is expected to roll over N228.72 billion worth of Nigerian Treasury bills maturities on Wednesday. Based on previous pattern, analysts forecast demand to remain strong with moderate adjustment on spot rates. Investment Opportunities: EU-Nigeria Businesses, Policy Makers Meet – Official
