Nigerian Treasury bills Yield Falls to 17.69% as CBN Reprices Rates
Investors locked in yield at the Nigerian Treasury bills amidst a primary market auction where the Central Bank of Nigeria (CBN) opened N570 billion short-term borrowing instrument for subscription.
Reflecting strong market liquidity and the expectation that the authority would slash discount rates, trading activities heated up in the secondary market concurrently while banks and other investors were opening bids for the midweek auction.
A slew of fixed income market analysts maintained Nigerian Treasury bills will attract lower rates throughout the fourth quarter on the back of CBN’s dovish tilt at its Sept. policy committee meeting. While the primary market auction was ongoing, investors were also betting on the naira asset in the secondary market.
Investors showed interest in long segment of the curve, causing yield to contract by 21 bps. The market recorded demand for the 06-AUG (-83 bps) and 20-AUG (-173 bps) bills – alongside moderate movements on the OMO curve.
Across the curve, the average yield expanded at the short (+3 bps) end, driven by profit-taking activities on the 73-day-to-maturity (+30 bps) bill, but contracted at the mid (-42 bps) and long (-3 bps) segments.
The yield contraction was due to the demand for the 157-day to maturity (-122 bps) and 346-day to maturity (-3 bps) bills, respectively. Overall, the average yield contracted by 10 bps to settle at 17.69%. Similarly, the average yield contracted by 3 bps to 20.5% in the OMO segment.
The auction attracted ₦1.06 trillion in total subscriptions, with ₦570.0 billion allotted. Stop rates settled at 15.00% (0 bps) for the 91-day paper, 15.25% (-5 bps) for the 182-day, and 15.77% (101 bps) for the 364-day tenor.
The treasury bills market is expected to maintain bullish momentum following the lower-than-expected stop rate on the 1-year paper, which may fuel demand for medium- to long-term bills. CBN Grabs Full Control of the Debt Market – What It Means for Investors
