Return on Treasury Bills Dips Ahead of CBN Auction
The average return on Nigerian Treasury bills dipped to about 8% ahead of the Central Bank primary market auction on Wednesday. The Apex bank will roll over maturing T-bills worth N214.74 billion via the primary market this week.
The offer is expected to be split into 91-day bills worth N1.03 billion, 182-day bills worth N10.55 billion, and 364-day bills worth N203.15 billion.
“… We expect the stop rates of the issuances to decline amid ample liquidity pressure”, Cowry Asset Managers told investors in its market update. In the secondary market, trading activities were bullish as ample liquidity in the system drove participation.
As a result, the average yield across all instruments contracted by 48 basis points to 7.9%, according to a separate analysts’ market report reviewed by MarketForces Africa.
Across the market segments, Cordros Capital Limited said the average yield declined by 63 basis points to 7.6% at the Nigerian Treasury bills segment. However, yield expanded by 219 basis points to 13.4% in the OMO segment of the secondary market.
“We envisage higher yields in the Treasury bills secondary market in the coming week, as the low inflows into the financial system will likely weaken demand for bills”, Cordros Capital said.
Fixed income market analysts said they expect market focus to be shifted to the primary market auction holding on Wednesday where the CBN is scheduled to roll over N214.74 billion worth of maturities.
Last week, activity in the money market was muted given the zero-maturity and auctioned Treasury and OMO bills. Analysts highlight that funding rates remained in single-digit as system liquidity remained elevated – average system liquidity settled at a net long position of N723.80 billion versus a net long position of N363.38 billion in the previous week
Short-term benchmark rates saw 23 basis points and 18 basis points contractions in the overnight lending and repo rates to 1.67% and 2.42% apiece. #Return on Treasury Bills Dips Ahead of CBN Auction ##Treasury bills explained
