Nigeria Treasury Bills Yield Jumps 16bps

There was a rack of selloffs on Nigerian Treasury bills in the secondary market as local investors began to weigh market dynamics and auction results to reposition their books.

On one side, there is an expectation of yield reprising due to rising headline inflation and steady liquidity in the financial system ahead of the Debt office’s next auction sales on Monday 11 December 2023.

The benchmark yield remains attractive to local banks with heavy loads of cash in their vaults seeking alternatives to much riskier lending businesses. MarketForces Africa reported that Nigerian banks’ lending appetite has switched to double-digit yield in the fixed income market.

Due to uncertainties in the economy, the sector has seen negative credit migration in 2023 after Nigeria devalued the naira, with surging inflation and high-interest rates. In the money market, banks are betting large on placements.

The recent decision by the central bank to remove N2 billion cap on the amount banks can lodge in its standard deposit facility has encouraged banks to put in more funds.

In the money market, Nigerian Interbank rates trended higher across all tenor buckets as illiquidity hit the financial system.

Data from the FMDQ platform revealed that the open repo rate (OPR) and overnight lending rate (OVN), increased by 0.66% and 0.68% to 16.21% and 16.68%, respectively.  

In its market update, Cowry Asset Limited said the Nigerian Interbank Treasury Bills True Yield observed an upward trend across most maturities, except the 1-month NITTY which faced a decline of 4bps to settle at 5.10%.

Additionally, the average secondary market yield on Nigerian Treasury Bills experienced a bearish trend, rising by 16 basis points to 11.11%. Nigeria Eurobond Slumps after CBN Resumes OMO Auction