Nigerian Treasury Bill Yield Bends Rates Slump at Main Auction
The average yield on Nigerian Treasury bill declined in the secondary market on the back of sustained demand for Naira assets. The elevated yield in the fixed income securities market has become a center of attraction for local investors. The fixed income asset rally has reduced positive trading activities in the equities market.
Asset managers’ appetite increased on the expectation that inflation conditions would improve further. At the main auction, investors staked huge bets on Treasury bills. The lost bids at the primary market auction conducted by the apex bank saw declines in spot rates across standard maturities.
The monetary authority also allotted Nigerian Treasury bills of significantly less amount to investors who sought to park funds in short term borrowing instruments at rates currently below the consumer price index.
At the midweek auction conducted on behalf of the Central Bank, the Debt Management Office (DMO) sold the exact amount offered totaling about N161.88 billion to market participants.
The rates for the 91-day, 182-day, and 364-day closed at 16.63% (-37 bps), 17% (-50 bps), and 18.59% (-35 bps), respectively. Overall, the average mid-rate settled at 19%. Across the curve, traders reported that the average yield declined at the short (-5 bps), mid (-1 bp), and long (-2 bps) segments.
The yield contraction was driven by participants’ demand for the 57-day to maturity whose yield lost -31 bps. At the belly of the curve, demand for 176-day to maturity bills caused its yield to slump by a basis point.
At the end of the curve, demand for 288-day to maturity dragged yield lower by -54 bps. Meanwhile, the average yield expanded by 5 basis points to 23.6% in the OMO bills segment in the secondary market. #Nigerian Treasury Bill Yield Bends Rates Slump at Main Auction Naira Suffers Big, CBN Goes Ballistic Against FX Whales
