Nigerian Treasury Bills Yield Falls to 4%, Bonds Steady

Nigerian Treasury Bills Yield Falls to 4%, Bonds Steady

In the secondary market, trading activities on the Federal Government Bonds were steady on Wednesday amidst some unpriced uncertainties in the local economy.

However, there was heavy positioning across tenored in the Treasury bills space which forced yield lower to 4% as rally in the fixed income market continues following buying momentum that started late last year.

Consequently, the average yield on Nigerian Treasury bills instrument fell to 4.07%, shedding 122 basis points, according to traders amidst inflationary pressures – widening real returns.

Across the curve, analysts at Cordros Capital noted that the average yield closed flat at the short end but contracted at the mid (-158bps), and long (-233bps) segments following demand for the 155- day to maturity (-224bps) and 295-day to maturity (-436bps) bills, respectively.

Inflation rate for November 2022 which crossed 22% is projected to rise further following pressures emanating from weak local currency that is facing Nigerian manufacturing companies.

This is expected to be supported with the fact the petrol scarcity forced another upward price adjustment in the latter part of the year.  >>>Nigeria Raised N269bn from Debt Market at Higher Rates

In the money market, short-term benchmark rates: open repo rate and the overnight lending rate, stayed flat at 9.50% and 9.83% respectively. Robust system liquidity has continued to douse funding pressures in the money market, forcing rates to drop as the system liquidity closed in a net long position N1.40 trillion, according to Cordros Capital.

Elsewhere, the average yield was unchanged at 3.4% in the open market operations (OMO) bill segment.

In the bond market, the prices of FGN bonds remained steady for most maturities ahead of expected large borrowings in 2023. As a result, the average secondary market fell 8 basis points to 12.72%.

Across the benchmark curve, analysts said the average yield contracted at the short (-24bps) and long (-2bps) ends due to buying interests in the MAR-2024 (-87bps) and APR-2037 (-17bps) bonds, respectively. Conversely, the average yield closed flat at the mid segment.

Notably, the 20-year debt traded higher as its yield fell to 14.43% (from 14.60%), according to Cowry Asset Management analysts. Analysts noted that the yields on the 10-year, 15- year, and 30-year bonds were unchanged from the previous trading day at 12.60%, 13.50%, and 14.00%, respectively.

In the foreign debt capital market, the value of the FGN Eurobond increased for all of the maturities tracked due to sustained bullish activity, according to analysts’ notes. 

Thus, the average secondary market yield decreased by 20 basis points to 11.41% amid strong demand across the curve, Cowry Asset analysts stated. # Nigerian Treasury Bills Yield Falls to 4%, Bonds Steady