Nigerian Treasury Bill Yield Falls Before N290bn CBN Auction
The average yield on Nigerian Treasury bill eased despite cautious trading activity in the secondary market ahead of the primary market auction on Wednesday.
Trading activities reflected investors’ cautious mood as the Central Bank of Nigeria (CBN) maintained its position on its monetary policy, keeping all rates unchanged amidst various analysts rate expectations.
The authority’s action keeps real return on naira assets at above 5%, and analysts say the condition provides leeway and catalysts for rates repricing at the midweek. Already, discount rates on naira assets have been reduced, reflecting improvement in the macroeconomic situation in Nigeria.
As expected, government borrowing costs are adjusting to the economic and political risk. The Debt Management Office has already tightened bond supply while the government looks to external market for borrowings.
On Tuesday, trading activities in the Treasury bills market closed bullish as the average yield contracted by 17.1%, Cordros Capital Limited said in its investors note. Across the curve, the average yield contracted at the short (-1 bp), mid (-5 bps), and long (-6 bps) segments, driven by investors taking positions ahead of midweek auction.
The market recorded investors demand for Nigerian Treasury bills maturing in 79 days, causing its yield to dip by -1 bp. There was buying interest in Nigerian Treasury bills maturing in 170 days, and its yield slipped by -15 bps.
Bargain hunting for investors seeking duration dragged yield on Treasury bill maturing in 184 days down by -48 bps. Similarly, the average yield contracted by 1 bp to 24.6% in the OMO segment.
Fixed income securities analysts said they expect subdued activity in the secondary market as participants shift focus to the Treasury bills auction. #Nigerian Treasury Bill Yield Falls Before N290bn CBN Auction Zenith Bank Now Value at N3trn in Nigerian Bourse

