Nigerian Treasury Bills Rate Edges Upward as Naira Gains
The average yield on Nigerian Treasury bills edges upward two basis points on Thursday as Nigerian local currency, naira strengthened against the United States dollar at the Investors and Exporters window.
Naira holds sway in the Investors and Exporters window today despite a persistent decline in the nation’s gross external reserve which printed at $33.12 billion from $33.279 billion first day in July.
Amidst sloppy trading activities in the fixed interest rate market, trading in the Nigerian Treasury bill secondary market segment was mixed with a bearish tilt. Cordros Capital analysts in a note to clients said the average yield expanded by 2 basis points to settle at 6.8% for the day.
Meanwhile, across the benchmark curve, analysts said the average yield was flat at the short and mid segments but expanded at the long (+5bps) end.
The mixed swings in yields movement were attributed to the sell-off of the 296-day to maturity bill, up 53 basis points. Elsewhere, Cordros Capital analysts informed clients that the average yield at the open market operations (OMO) segment contracted by 5 basis points to 9.9%.
A bit of liquidity pressure was spotted at the financial system leading to upward interbank rates adjustment. The overnight lending rate stretched by 125 basis points to 11.8% following outflows for the Central Bank of Nigeria’s (CBN) weekly OMO auction of N17.00 billion.
Also, the Treasury bond secondary market recorded a bearish outing as fixed securities analysts spotted that the average yield expanded by 2 basis points to finally settle at 11.5%.
Across the benchmark curve, it was noted the average yield increased at the short (+2bps) and mid (+9bps) segments due to sell-offs of the JAN-2026 (+10bps) and APR-2029 (+18bps) bonds, respectively.
Conversely, analysts told clients that the average yield pared at the long (-2bps) due to demand for the JUL-2034 (-10bps) bond.
The naira appreciated by 0.1% to N411.25 to a United States dollar at the Investors and Exporters window but stayed flat at N503.00 in the parallel market.
In a related development, the United States government bond yields slumped to the lowest level since mid-February amid growing concern over the rapid spread of the coronavirus delta variant and as the Federal Reserve remained resolute in its expansionary policy stance.
Data obtained by MarketForces Africa shows that the US 10-year yield slides by 2.2 basis points to almost 1.3%, heading for the fourth consecutive day of declines.
Nigerian Treasury Bills Rate Edges Upward as Naira Gains
