Nigeria’s Treasury Bills Yield Slides Below 20%
The average yield on Nigerian Treasury bills has dropped below 20% following a sustained buying interest in the secondary market. The yield contraction was driven by strong buy sentiment across short, mid, and long tenors.
Consequently, the average yield backtracked by 0.03% to 19.91%, according to Cowry Asset Management Limited’s note to investors. With inflation messing up the value of the naira, there have been a surge in demand for short term investment instrument. This partly support yields inversion in the fixed interest securities market.
Inflation is expected to get dirtier throughout the first quarter of 2024 in spite of double digit high benchmark interest rate. In the last one year, the local currency has lost significant value, and the outlook remains uncertain.
Demand for Nigerian Treasury bills by investors seeking inflation protection has now dragged the average yield below 20% mark – from 25% after the apex bank spot rates repricing. The buying momentum was supported by solid liquidity level in the financial system yesterday.
In its market update, Cowry Asset Management told Investors that the Nigerian Interbank Offered Rate (NIBOR) declined by 28 percentage points to 30.58% on Monday.
The investment firm stated that the decline indicates availability of liquidity in the system. But the short term benchmark interest rate moved on the negative sides.
Data from FMDQ Securities Exchange platform showed that key money market rates such as the Open Repo Rate (OPR) and Overnight Lending Rate (OVN) increased, closing at 30.38% and 31.09%, respectively. FAAC: FG, States, LGs Share N1.143trn for May
