Nigerian Treasury Bills Yield Falls to 6.27% After Auction

Nigerian Treasury Bills Yield Falls to 6.27% After Auction

The average yield on Treasury Bills (NTB) bucket sloped downward as unmet demand at the Central Bank of Nigeria’s (CBN) primary market auction filtered through the over-the-counter market.

Consequent to the rally, the average yield shifted again downward, widening negative real return on investment in the segment ahead of an expected increase in headline inflation rate for May 2023.

At the midweek auction, the apex bank priced Nigerian Treasury bills rates higher as investors demanded higher returns on their investments. Subscriptions came in handy even with relatively healthy liquidity levels in the financial system.

Cowry Asset Limited said in its market note to investors that the Nigerian Inter-Bank Offered Rate (NIBOR) fell across most tenor buckets as liquidity conditions eased.

Analysts noted that banks with liquidity sought lower rates as the short-term benchmark rates contracted in the absence of financial pressures in the market.

Data from FMDQ Exchange showed that the open repo rate (OPR) and the overnight lending rate (OVN) contracted 13 basis points to 11.50%, and 10 basis points to 11.90% respectively.

In the secondary market, analysts noted that trading activities on Nigerian treasury bills turned bullish as the average yield contracted by 8bps to 6.27%.

In its market note, Cordros Capital told investors that across the curve, the average yield dipped at the short and mid segments. Specifically, the yield at the short end of the curve declined by 111 basis points while the mid-segment went down by 39 basis points.

The decline in the yield curve was spurred by market participants’ demand for the 77-day to maturity bills, whose yield declined 219 basis points, and 182-day to maturity whose associated yield dropped by 75 basis points.

Meanwhile, the average yield was flat at the long end due to a thin trading record in the segment. # Nigerian Treasury Bills Yield Falls to 6.27% After Auction Naira Steadies as Banks Issue Update on FX Purchase