Nigerian T-Bills, Bonds Mixed as Naira Appreciates

Nigerian T-Bills, Bonds Mixed as Naira Appreciates

The average yield on Nigerian Treasury bills closed flattish as the naira appreciated amidst the Central Bank midweek auction. Ahead of the CBN primary market auction, market participants went into solo mode in anticipation of a further decline in spot rate pricing.

These expectations came despite the fact that the liquidity level in the financial system has been drained, forcing some local banks to begin fresh visits to the CBN standing lending facility to augment their positions.

Confirming the development in its market update, Cowry Asset Management told investors that the Nigeria Inter-Bank Offered Rate (NIBOR) trended higher across all tenor buckets due to tighter liquidity conditions.

The overnight lending rate contracted by 336 basis points to 19.0%, in the absence of any significant inflow from the system. Activities in the Treasury bills secondary market were quiet, as the average yield closed flat at 4.3%.

The open repo rate (OPR) experienced significant declines, falling to 14.00% from 19.43%.

In the Over-the-Counter (OTC) bond market, Federal Government of Nigeria (FGN) bonds traded largely flat across various maturities, traders said in their updates.

However, mid- and long-dated bonds, particularly the 21 June 2053 debt, faced losses due to anticipated interest rate hikes at the Monetary Policy Committee (MPC) meeting, Cowry Asset Management told investors.

Fixed income market analysts said as a result, the average secondary market yield witnessed a slight expansion, rising to 12.22% from 12.20%.

The 10-year borrowing cost also saw an increase, yielding approximately 12.95% compared to the previous figure of 12.87%. Conversely, the 20-year and 30-year bonds remained stable at 14.21% and 14.12%, respectively.

Across the benchmark curve, Cordros Capital said the average yield expanded at the short (+20bps), mid (+4bps), and long (+24bps) segments as investors sold off the MAR-2027 (+74bps), APR-2029 (+7bps), and JUL-2034 (+58bps) bonds, respectively.

Elsewhere, FGN Eurobonds appreciated across most tracked tenors, reflecting sustained bullish sentiment, as the average secondary market yield contracted to 10.42% (from 10.47%).

In the foreign exchange market, the Naira strengthened against the US dollar at the Investors and Exporters (I&E) windows, trading at N791.42 from N792.04. Similarly, in the parallel market, the Naira appreciated by 0.91% to N867 against the US dollar. #Nigerian T-Bills, Bonds Mixed as Naira Appreciates Chinese Yuan Strengthens to 7. 1406 Against the Dollar