Nigerian Treasury Bills Yield Rises as Banks Trim Holdings
The average yield on Nigerian Treasury bills inched higher to about 24.2% in the secondary market as local deposit money banks sold off investment securities to meet funding requirement.
Most selling interest was focused on short- and medium-dated papers as market participants sought to meet their funding obligations, AIICO Capital said in a note.
Liquidity crunch in the financial markets remained strong with money market rates trending above 32% since the central bank repriced standing lending portfolio rate to 31.7% in Sept.
Banks, in the centre of the financial markets equation, switched inward their quest for funding by selling treasury bills holdings.
This pushed the average yield higher but funding pressures only eased with miniscule impacts of rates, the short term benchmark interest rates remained elevated.
Specifically, the Overnight Policy Rate (OPR) fell by 3 bps to 32.33%, while the Overnight Rate (OVN) decreased by 44 bps to 32.56%.
The market remains short in terms of liquidity balance ahead of Central Bank of Nigeria (CBN) primary market auction in the new week.
For the week, the market anticipates cautious trading with a mixed tone, as there will be a Treasury bills auction worth ₦374.67 billion across standard tenors in the new week.
In its note, Cordros Capital Limited said the average yield expanded by 100 basis points to 24.2% in the Nigerian Treasury bills segment and inched higher by 1bps to 25.9% in the OMO bills segment.
“We believe the projection of a better liquidity position next week will boost demand for bills, thereby driving down yields in the secondary market”, analysts said.
Nigerian Interbank Treasury Bills True Yield (NITTY) experienced upward movement across all maturities, while the average secondary market yield on T-bills rose, settling at 24.16% due to sell-sentiment, Cowry Asset Limited added.
The liquidity balance in the financial system was lifted high by N28.22 billion inflows from FGN bond coupon payments.
Analysts said the inflows were insufficient to provide support system liquidity, causing the overnight lending rate to remain elevated.
Consequently, the average liquidity position declined, closing at a net short position of N1.51 trillion from a net short position of N643.66 billion in the previous week. #Nigerian Treasury Bills Yield Rises as Banks Trim Holdings
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