Returns on Nigerian Treasury Bills Stay Healthy Ahead of Auction
The average yield on Nigerian Treasury Bills declined to 21.03% ahead of the midweek auction. Investors were seen taking positions at the beginning of the trading week across the short, belly, and long ends of the curve.
Investors’ appetite for naira assets remained strong and healthy despite spot rate fluctuations seen at the recent past auctions and disinflation, which has reduced real return on investors.
In the secondary market, selective interest in Nigerian Treasury bills was seen at the long end, particularly in the 19 Feb paper (-44bps), pulling the average yield down by 5 bps to 21.03%
Foreign portfolio investors on the sell side dominated trading activity in March and April OMO bills, while buyer interest remained limited. Trading volumes stayed subdued throughout the session as participants positioned cautiously ahead of Wednesday’s Nigerian Treasury auction.
At the auction, the CBN will open N550 billion worth of bills for subscription across 91-day, 182-day, and 364-day maturities as part of its liquidity management efforts. The prevailing market sentiment is expected to continue until after the auction results on Wednesday, fixed-income market analysts told MarketForces Africa.
Across the curve, the average yield contracted at the mid (-3 bps) and long (-7 bps) segments, following demand for the 157-day to maturity (-4bps) and 290-day to maturity (-44bps) bills, respectively.
The yield, however, closed flat at the short end. Similarly, the average yield contracted by 6 bps to 26.9% in the OMO bills segment in the secondary market. The CBN conducted an OMO auction on Tuesday, offering ₦500 billion across the 329-day and 350-day tenors.
The auction attracted significant interest, with total subscriptions reaching ₦1.06 trillion. To manage excess liquidity, the CBN oversold by ₦304.85 billion, with stop rates clearing at 22.69% and 22.73% for the 329-day and 350-day papers, respectively. #Returns on Nigerian Treasury Bills Stay Healthy Ahead of Auction Nigeria’s Debt Office Sells 9-Year Bonds at 19.99%
