Nigerian T-Bills Yield Inches Higher Ahead of CBN Auction

Nigerian T-Bills Yield Inches Higher Ahead of CBN Auction

The average yield on the Nigerian Treasury bills inches higher on Tuesday ahead of the Central Bank (CBN) primary market auction (PMA) scheduled for tomorrow.

In the secondary market,  the Nigerian T-bills traded on mixed sentiments following 36 basis points and 1 basis point climbs in the short and mid tenors while the long tenor dropped by 7 basis points.

Consequently, the average yield climbed by 5 basis points to close at 5.30%. Amidst cold activities in the fixed income market, yields have been on a decline amidst the expectation of a further reduction in the headline inflation rate.

The CBN is expected to conduct a primary market auction on Wednesday and analysts are predicting that spot rates would be relatively stable across all tenors. The subscription level is also expected to be robust, though this has been a downside to an uptick in spot rates in the past auctions.

In the third quarter of the year, spot rates on 364-day Nigerian T-bills were affected by robust liquidity in the financial system, and steep demand for long-dated instruments as investors endless search for better returns.

In the money market, interbank rates ease further amidst stronger system liquidity, with open buy-back and overnight lending rate slowed down to single-digit while naira trades flattish at the Investors and exporters foreign exchange window.

Data from the FMDQ Exchange platform shows that the local currency was flat at N414.30 to a dollar, though it depreciated at the unofficial currency market.

The average interbank rate declined by 5.09 percentage points to 5.25% following a 500 basis points drop in the Open Buy Back rate and 517 basis points slide in overnight lending rate to close at 5.00% and 5.50%, respectively.

The slowdown in the short term rates indicators occurred following N110 billion inflows from open market operations (OMO) maturities.

Meanwhile, the Nigerian treasury bills secondary market closed on a bearish note, as the average yield expanded by 4 basis points to 5.3%, according to Cordros Capital market report on Tuesday.

Analysts at the firm told its clients via email that across the benchmark curve, average yield closed higher at the short (+24bps) and mid (+14bps) segments as market participants sold off the 16 days to maturity (+45bps) and 170 days to maturity (+35bps) bills, respectively.

However, average yield declined at the long (-11bps) end following demand for the 198 days to maturity (-51bps) bill. Elsewhere, the average yield at the open market operations segment was unchanged at 6.5%.

Alpha Morgan Capital hinted that activity at the Federal Government of Nigeria bond secondary market was mixed in today’s session following a slight climb in the short end of the curve by 1bps while the long end of the curve dropped by 2 basis points

As a result, the average yield remained flat to close at 11.35%.

Analysts at Cordros Capital stated that across the benchmark curve, average yield expanded slightly at the short (+1bp) end driven by sell pressures on the JAN-2022 (+7bps) bond but contracted at the long (-2bps) end as investors demanded the MAR-2036 (-16bps) bond; the average yield was flat at the mid-segment.

Market data shows that activities at the Eurobond market traded on a bearish note following expansions across all instruments. In sum, the average yield climbed by 5 basis points to close at 6.53%. #Nigerian T-Bills Yield Inches Higher Ahead of CBN Auction

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