Nigerian T-Bills Yield Spikes Strongly to 3.7%
The average yield on Nigerian Treasury bills spiked strongly due to selloffs across tenored in the secondary market amidst a slowdown in financial system liquidity at a time when inflation worries in the local economy increased to 21.82%.
In the money market, there was a decline in liquidity level in the financial system as a result of funding demand, pushing short-term benchmark rates upward into the double-digit range.
Market data indicates that the open repo rate (OPR) and the overnight lending rate (OVN), ballooned to 16.13% (from 10.75%) and 16.63% (from 11.20%), respectively.
The strain on financial market liquidity position was driven by the settlement of the February Federal government of Nigeria (FGN) primary market bond auction worth N770.56 billion, according to fixed income analysts notes.
As liquidity dropped, investors began to dump their treasury holdings to raise cash and rebalance portfolio positions at the time when the statistics office announced a surge in the consumer price index to 21.82% for the month of January.
With a shift in trading patterns, the Nigerian Treasury Bills secondary market traded with bearish sentiments, as the average yield expanded by 206 basis points to 3.7%.
Across the curve, the average yield expanded at the short (+142bps), mid (+322bps), and long (+200bps) segments following selloffs of the 85-day to maturity (+272bps), 113-day to maturity (+366bps) and 344-day to maturity (+393bps) bills, respectively, according to Cordros Capital.
Similarly, traders noted that the average yield expanded by 75 basis points to 2.9% in the OMO bills segment. Yesterday, the National Bureau of Statistics (NBS), revealed that inflation reached its highest level since September 2005 in January 2023, at 21.82%. # Nigerian T-Bills Yield Spikes Strongly to 3.7%