Selloffs Nudge Treasury Bills Yield Higher Ahead of Auction
Investors in the fixed interest securities market sold their Treasury bills in the secondary market ahead of schedule primary market auction tomorrow. The secondary market for Nigerian borrowing instrument ended on bearish note due to reduced interest in bills at the short and belly of the curve.
Banks were noted to unload their investment in government securities as a result of tight liquidity in the financial system. However, liquidity pressure eased slightly on Tuesday as banks showed preference in borrowing from the central bank standing lending facility.
Opening system liquidity remained in the negative territory. Nevertheless, the Open Repo Rate (OPR) declined by 39 bps to 31.67%, while the Overnight Rate (O/N) fell by 25 bps to 32.28%.
Other authorised traders also adjusted their portfolios ahead of inflation data. Most analysts have expressed views that the nation’s economic health may not be able to accept another interest rate hike as growth slowed down in the first quarter due to multi-faceted issues.
According to fixed income analysts, most of the selling interest in the T-bills market were focused on the long end of the curve. As a result, the average mid-rate rose by 32bps to 21.75%., according to AIICO Capital Limited.
In its note, Cordros Capital Limited said the average yield declined at the short (-3bps) and mid (-4bps) segments. Analysts said the yield contraction was driven by buying interest in the 80-day to maturity (-3bps) and 171-day to maturity (-4bps) bills, respectively.
Meanwhile, the average yield expanded at the long (+28bps) end due to profit-taking activities on the 248-day to maturity (+108bps) bill. In the OMO segment, the average yield contracted by 5bps to 24.3%. Nigeria’s Debt-to-GDP Within World Bank/IMF Ceiling – DMO
