Nigerian Treasury Bill Yield Falls by about 2% before Auction
The average yield on Nigerian Treasury bills fell in the secondary market by about 2% ahead of primary market auction for Wednesday. At the primary market auction, the Debt Management Office (DMO) would be offering Treasury bills worth about N410 billion to investors.
Analysts have predicted that the auction will be well received despite tight liquidity level in the financial system. On Tuesday, liquidity squeeze raised short-term benchmark interest rates in the money market significantly.
Key money market rates, such as the open repo rate and overnight lending rate increased by 499bps each to reach at 33.69% and 34.36%, respectively. Yet, investors increase interest in Treasury bills. with heavy buying momentum, causing the yield curve to contract.
Traders explained that the yield contraction was driven by demand for naira assets in the over-the-counter as investors seek high return investment options.
As trading activities ended with bullish sentiments, as the average yield contracted by 185 basis points to 23.1%, according to Cordros Capital Limited, a Lagos-based investment firm.
Traders reported that the average yield declined at the short (-396bps), mid (-306bps) and long (-8 bps) segments. The decline in yield was driven by buying interests in the 52-day to maturity which shed 543bps.
There was also heavy demand at the belly of the curve. Investors ramped up 143-day to maturity bills, causing its yield to decline by 457bps while demand for 206-day to maturity bills dragged yield lower by -33bps.
Similarly, the average yield declined by 3 basis points to 25.8% in the OMO bills segment in the fixed income securities secondary market on Tuesday.
Analysts at AIICO Capital Limited expect attention to be tilted towards the Nigerian Treasury bills auction, where the DMO would offer T-bills worth ₦409.98 billion. #Nigerian Treasury Bill Yield Falls by about 2% before Auction
