Nigerian T-Bills Drops to 8.4% Ahead of Midweek Auction

Nigerian T-Bills Drops to 8.4% Ahead of Midweek Auction

The average yield on Nigerian Treasury bills (NTB) declined marginally to 8.4% at the beginning of the week ahead of the Central Bank of Nigeria (CBN) primary market auction scheduled for Wednesday.

The apex bank will roll over maturing T-bills worth N303.22 billion via the primary and secondary markets. The offer would be split into 91-day bills worth N9.96 billion, 182-day bills worth N10.21 billion, and 364-day bills worth N283.04 billion.

Cowry Research told investors in an update that the investment firm expects the stop rates of the 364-day treasury instrument to rise amid an expected strain in financial system liquidity.

Yesterday, the overnight lending rate expanded by 351 basis points to 23.3% as a result of significant funding pressure on the system. The repo rate declined by 2.31 percentage points to 22.50%. Traders said they envisage lower yields in the Treasury bills secondary market as the anticipated inflows into the financial system will likely fuel bargain hunting in bills.

In a market update, Cordros Capital told investors its analysts expect market focus to be shifted to the primary market auction holding on Wednesday. In the secondary market, the Treasury bill traded with mixed sentiments, albeit with a bullish tilt, as the average yield pared by 1 basis point to 8.4%.

Across the curve, traders said the average yield closed flat at the short and mid segments but contracted at the long (-1bp) end following mild interests on the 339 days to maturity (-1bp) bill.  Similarly, the average yield pared by 1bp to 11.2% in the OMO bill segment.

In the past week, T-bills and OMO activities were subdued due to the absence of maturing bills. This further put pressure on liquidity as the deposit money banks were already facing funding pressure from bond auctions. #Nigerian T-Bills Drops to 8.4% Ahead of Midweek Auction

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