Nigerian Treasury Bills Yield Increases to 23% after Disinflation
The average yield on Nigerian Treasury bills yield climbed by six basis points to 23% in the secondary market as market expects fresh auctions.
Moderate selloffs were witnessed at the short end of the curve in the secondary market after July inflation decline raised expectation about benchmark interest rate adjustment.
The Nigerian Treasury bills secondary market however registered increase demand at the belly and long end of the curve yesterday, in contrast to short position on 15-day to maturity instruments.
Even with liquidity strain on the financial system, bills buying has gained momentum due to elevated yield, causing investors to continue to park cash in the naira assets.
In the money market, banks experienced excess liquidity following today’s T-bills maturity, which prompted an uptick in the use of the Standing Deposit Facility, Cowry Asset Limited told investors in an email note.
Hence, key money market rates such as the Open Repo Rate (OPR) and Overnight Rate decreased by 764 and 776 basis points to 26.05% and 26.60%, respectively, as confirmed by data from the FMDQ platform.
Treasury analysts said the average yield expanded at the short (+94bps) end following profit-taking on the 15-day to maturity (+158bps) bill.
On the other hand, yield contracted at the mid (-50bps) and long (-18bps) segments as participants demanded the 155-day to maturity, which caused its yield to by 119bps and investors’ interest in 246-day to maturity dragged yield downward by -195bps.
Conversely, the average yield contracted by 8 basis points to 25.7% in the OMO bills segment in the secondary market
Analysts hint that the Nigerian Interbank Treasury Bills True Yield (NITTY) declined across maturities as investor sentiment weakened following today’s NTB auction. This shift in sentiment led to bearish momentum in the secondary market for Nigerian Treasury Bills. #Nigerian Treasury Bills Yield Increases to 23% after Disinflation
