Selloffs Push Nigeria Treasury Bills Yield to 8.3%

In the secondary market, there was strong sell-side trade on Nigerian Treasury bills as the local currency, the naira, lost its shine on Monday. The yield curve shifted upward in reaction to Nigeria’s market conditions. 

Both interest and inflation rates are trending higher while investors’ return on naira assets remains exposed to price and exchange rate instability. 

Last week, the apex bank increased rates on Treasury bills sold at the primary market to fixed interest securities investors. Then, there were selloffs despite lost bids at the Central Bank of Nigeria (CBN) mid-week auction.

Following pressures in the forex market, investors reacted by dumping treasury bills’ interest. Sentiments in the Treasury bills secondary market were bearish largely bearish across the short and mid-tenored instrument.

Consequently, the average yield expanded by 160 basis points to 8.3%, according to traders report. Across the curve, Cordros Capital Limited told investors via email that the average yield advanced across the short (+224bps), mid (+310bps) and long (+37bps) ends.

This was driven by profit-taking activities on the 87-day to maturity (+305bps), 164-day to maturity (+422bps) and 192-day to maturity (+468bps) bills, respectively. Meanwhile, the average yield declined marginally by 1bp to 8.4% in the OMO segment.

Similarly, the Treasury bond secondary market traded on a negative note, as the average yield increased by 17 basis points to 13.9%. Across the benchmark curve, the average yield expanded at the short (+53bps) end as market players sold off the MAR-2024 (+267bps) bond but were flat at the mid and long segments.

In the money market, the overnight borrowing rate dipped by 6.19% to 13.31%, depicting an improvement in the liquidity system.

Data from the FMDQ platform showed that short-term interest rates adjusted downward as a result of a liquidity boost. Key money market rates, such as the open repo rate (OPR) and overnight lending rate (OVN) declined to conclude at 13.15% and 14.80%, respectively. #Selloffs Push Nigeria Treasury Bills Yield to 8.3%#

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