Nigeria’s Fixed Interest Assets Diverge as Naira Falls

Nigeria’s Fixed Interest Assets Diverge as Naira Falls

As the local currency fell to N461.50 in the investors’ and exporters’ foreign exchange (FX) window, the average yield on Nigerian Treasury bills slumped in the secondary market.

The reversing yield came following buying momentum on the short-term investment instruments as liquidity pressures in the financial system eased. Meanwhile, in the bond market, trading activities close tight with thin transactions as investors continue to weigh rising inflation and interest rate.

Largely, the money market is reacting both ways depending on the market mood to the new interest rate regime as cash-rich banks demand lower rates, after the Nigerian interbank offered rate popped in the previous week.

The interbank rate declined across the board for all maturities tracked as gauges of money market stress eased and banks with liquidity requested lower rates.

Based on market data obtained and affirmed by investment banking firms, short-term benchmark rates, such as the open repo rate (OPR) and the overnight lending rate (OVN), moderated to 17.13% (from 18.25%) and 17.63% (from 18.88%), respectively.

Due to increased demand for bills that can be easily converted to cash by a number of market participants, the average secondary market yield on T-bills decreased to 5.54%.

In the bond segment, the value of FGN bonds was mainly flat, according to Investment banking firm, Cowry Asset Management Limited, even as the average yield on the secondary market stayed flat at 13.19%.

The investment firm told clients via email that the 20-year bond was 67 basis points cheaper, while its corresponding yield increased to 14.95% (from 14.83%).

On the flip side, analysts noted showed that the 30-year FGN bond was 98 basis points richer, while its corresponding yield decreased to 15.00% (from 15.15%). The 10- year and 15-year Bonds yields were stable at around 12.50%, and 14.69%, respectively.

Elsewhere, the value of the FGN Eurobond traded higher for most of the maturities amid renewed bullish sentiment. Similarly, the average secondary market yield contracted to 13.48%, analysts stated.#Nigeria’s Fixed Interest Assets Diverge as Naira Falls

CBN Devalues Naira 12.95% despite Rising Foreign Reserves