Investors Trim Treasury Bills Holdings as CBN Cuts Rate
The average yield on Nigerian Treasury bills jumped in the secondary market as investors offloaded naira assets at the time when the Central Bank of Nigeria (CBN) reduced the spot rate on one-year bills.
The treasury bills market started the week with a bearish sentiment. During the week, the Debt Management Office (DMO) offered around ₦216.09 billion on behalf of the monetary authority as part of liquidity management efforts.
Investors submitted bids which was 2.25 times the amount offered. In the secondary market, sell spree persisted ahead of inflation data expectation. By consensus, Broadstreet analysts said consumer price index will start declining from July reading, citing base effects.
Investors in the fixed income market continue to look out for catalysts that will drive yield repricing despite elevated yield on borrowing instruments. While Nigeria’s yield is high, investors’ money remains exposed to inflation pressure, earning negative interest on naira assets.
On the back of Treasury bill selloffs experienced in the secondary market last week, the average yield across all instruments expanded by 51 basis points to 25.9%, analysts said in their separate notes.
The average yield advanced to 25.8% in the NTB segment and increased by 87 basis points to 26.1% in the OMO segment after two failed primary market auctions. Details from the Nigerian Treasury bills auction results showed that the DMO offered N216.09 billion. The offer was split across standard maturities.
DMO offered N16.59 billion worth of 91-day Treasury bills to investors, a total of N51.35 billion worth of 182-day and N148.15 billion for the 364-day bills were also offered to investors. Demand at the auction settled at N486.87 billion as against N373.95 billion at the previous auction, which was 2.25times total offering.
The auction closed with the DMO allotting exactly what was offered at respective stop rates of 18.50% for 91-day Treasury bills. The spot rate for 192-day bill was 19.50%. Both rates were unchanged from the previous auction.
However, spot rates for one year treasury bills was reduced to 21.89% from 22.10% clearing rate at the previous auction. # Investors Trim Treasury Bills Holdings as CBN Cuts Rate Stanbic IBTC Adds Fixed Income Asset into Securities Lending Services
