Nigerian T-Bills Yield Hits 7.12% after Rate Hike
The average yield on Nigerian Treasury bills rose marginally on Monday due to early exit trade by some fund/asset managers seeking to optimise their portfolio returns. Even with the bearish tilt, local deposit money banks held back as they maintained balanced liquidity pressures.
At the beginning of the week, the liquidity level was moderated versus the level of demand, resulting to a moderate jump in short-term benchmark rates.
Data from the FMDQ Exchange showed that money market rates or funding rates were higher on Monday, recording a marginal increase in the absence of any significant outflow from the system.
Key money market rates, such as the open repo rate and the overnight lending rate, rose slightly by two basis points apiece to 0.92% from 0.90% and 1.42% from 1.40%.
Specifically, financial system liquidity increased to ₦685.57 billion from ₦582.96 billion recorded on Friday. The effects of these filtered into the secondary market where fixed income traders buy and sell government bills.
It was noted that trading activities in the segment ended with mixed sentiments, albeit with a bearish tilt, as the average yield expanded by one basis point to 7.1%.
Across the curve, Cordros Capital Limited told investors via email that the average yield closed flat at the short and mid segments but increased at the long (+2bps) end due to selling pressures on the 311 days to maturity (+23bps) bill.
Last week, the central bank repriced Nigerian treasury bills higher across tenors after the monetary policy committee raised the benchmark interest rate by 25 basis points to 18.75%. Analysts expect that yield repricing will be solid in the second half of 2023 due to changing market dynamics.
Inflation pressures would continue to rise down the year, analysts told MarketForces Africa in an email comment, saying that a widening gap on real return on naira assets would be closed. #Nigerian T-Bills Yield Hits 7.12% after Rate Hike NGX Slumps as Unimpressive Earnings Prompt Selloffs
