Nigerian T-Bills Yield Shrinks Below 4%
The average yield on Nigerian Treasury bills (NTB) has fallen below 4% due to bullish trading activities in the secondary market. Market players in the space are keeping their eyes close to the curve amidst an expectation that inflation will swing negatively in the first quarter of 2024.
On the other hand, there has been an improvement in the financial system’s liquidity. This has reduced short-term rates in the money market to single digits, according to data from the FMDQ platform reviewed by MarketForces Africa.
The latest data showed that the overnight lending rate contracted by 150 basis points to 7.0%, in the absence of significant funds movement from the system.
Key money market rates, including the open repo rate (OPR) and overnight lending rate (OVN), decreased by 2.42% and 1.50% to close lower at 4.63% and 7.00%, respectively.
Reacting to liquidity and market dictates, fixed interest income investors ramped up Treasury bill instruments, which then caused the average yield to contract by 53 basis points to 3.8%.
In its market update, Cordros Capital Limited said across the curve, the average yield declined at the short (-81bps), mid (-39bps) and long (-85bps) segments.
The contraction came as market participants demanded the 65-day to maturity (-162bps), 93-day to maturity (-161bps) and 352-day to maturity (-244bps) bills, respectively. Dangote Reacts to EFCC Visit to Headquarters
Analysts noted that elsewhere, the average yield was unchanged at 8.4% in the OMO bills segment. Similarly, the Treasury bond secondary market was bullish, as the average yield contracted by 24bps to 13.5%.
Across the benchmark curve, Cordros Capital said the average yield dipped at the short (-22bps), mid (-4bps) and long (-30bps) segments as investors demanded the MAR-2024 (-92bps), JUN-2033 (-12bps) and APR-2037 (-68bps) bonds, respectively.
