Return on OMO, Treasury Bills Slide to 26% amidst Rally
The average return on Nigerian open market operations (OMO) and Treasury bill instruments settled at 26% in the secondary market on Thursday. Specifically, fixed interest securities traders reported that the average yield on the Nigerian Treasury Bill slumped six basis points as investors increased their asset holdings.
The market reacted to the latest spot rate reduction on the one year Treasury bill sold to investors at the primary market auction (PMA) conducted by the apex bank during the week. The auction value has also dragged the liquidity balance in the financial system lower, causing money market rates to see significant expansion.
Analysts said the yield curve fell because of buying momentum on selected instruments. The average yield contracted by six basis points to 26.0%, according to Cordros Capital Limited. The investment firm said across the curve, the average yield declined at the short (-1bp), mid (-2bps), and long (-11bps) segments.
Analysts attributed the yield contraction to participants’ demand for the 91days to maturity (-2bps), 182 days to maturity (-2bps), and 245days to maturity (-87bps) bills, respectively. Similarly, the average yield contracted by 2 basis points to 26.1% in the OMO bills segment in the secondary market yesterday.
Elsewhere, the Nigerian Treasury bill true yield (NITTY) rates rose across most tenors, indicating positive investor sentiment. In the money market, Nigerian Interbank offered rates that increased across all tenors following the CBN’s retail FX sale to banks.
Key money market rates, including the Open Repo Rate (OPR) and the Overnight Lending Rate (OVN), surged, closing at 30.97% and 31.72%, respectively, said Cowry Asset Limited in a note to investors. #Return on OMO, Treasury Bills Slide to 26% amidst Rally Liquidity: Banks Drive Yield Surge with T-Bills Selloffs
