Selloffs Provoke Rise in Treasury Bills Yields to 22.4%
A fresh selloffs on Nigerian Treasury bills (NTB) has provoked a further increase in benchmark yield in the fixed interest securities secondary market, according to traders’ notes.
Following slowdown in spot rates at Treasury bills auction conducted by the Central Bank of Nigeria (CBN), market participants who lost bids had flooded the secondary market to boost their portfolio.
However, there have been a switched in trading pattern following improved liquidity in the financial system. Higher liquidity level has forced short-term interest rates or funding rates to fall below 30%, according to data from FMDQ Securities Exchange.
The overnight lending rate contracted by 258 basis points to 28.4%, in the absence of any significant pressures on liquidity position in the money market.
As a result, demand for funding among banks decline as N35 billion worth of OMO bills become matured, raising the total liquidity in the market.
Having stayed above 30% for long, key money market rates, such as the open repo rate (OPR) and overnight lending rate (OVN), retreated to 27.63% and 28.42% as the ease in funds demand, Cowry Asset Management Limited told investors.
Traders at Cordros Capital Limited told investors that activities in the T-bills secondary market remained bearish on Thursday. The selloffs caused the average yield to expand by 21bps to 22.4%.
The investment banking firm said across the curve, the average yield declined at the short (-3bps) and mid (-2bps) segments. The yield contraction at the short end following interest in the 70-day to maturity (-3bps) and 175-day to maturity (-2bps) bills, respectively.
However, yield advanced at the long (+46bps) end of the curve as players took profits off the 217-day to maturity (+192bps) bill. Elsewhere, the average yield dipped by 2bps to 18.7% in the OMO bills segment in the secondary market. Odu’a Investment Shareholders Approve N428m Dividend for 2023
