T-Bill Rate Rise as Investors Adjust Portfolio Maturity Positions
The Nigerian Treasury Bill (NTB) secondary market closed on a bearish note, as the average yield expanded by 10 basis points to 6.4% amidst funding pressure in the financial system.
The funding rate was faced with renewed pressure as Open Buy Back (OBB) and Overnight (O/N) rates increased by 233 and 208 basis points to 17.00% and 17.25% respectively.
Analysts at Chapel Hill Denham said the significant surged was on the back of demand pressures for short term funds by participants in the market.
Meanwhile, the fixed income market displayed bearish sentiments today, particularly in the NTB stretch of the curve as investors resumed secondary market activities after the Primary Market Auction (PMA) that held yesterday.
Except for the Jul-21 and Aug-21 maturities, investors sold off the long end of the NTB curve to readjust their maturity holdings. Consequently, the Nigerian Treasury Bill expanded by 9 basis points to 6.14% on Thursday.
Due to a shift in investors’ attention to the NTB space, the open market maturity (OMO) market traded quiet today and OMO benchmark curve closed flat at 9.22%.
Also, analysts said pattern of investors’ cherry picking bond maturities continued with most activities clustered in intermediate maturities. However, the activities of investors were offset, which prompted the bond curve to move up by 1bps to 13.04%.
Treasury bill space has been quiet, recording flattish movement as investors waited for the Central Bank (CBN) auction. At the NTB auction that held yesterday, the CBN sold a total of N179.3 billion worth of treasury bills.
The CBN total Treasury bill sales was split as 91-day: N5.06 billion; 182-day: N10.09 billion and 364-day: N164.10 billion.
Analysts said the auction was over-subscribed, particularly the 364-day maturity, which has been the trend in previous auctions while the bid-to-offer ratio on the 364-day was 3.9x.
According to Chapel Hill Denham, the CBN auction cleared at 2.5% (91-day), 3.5% (181-day) and 9.64% (364-day). It also noted that this stop rates were similar to the last auction in the case of the 91- and 181-day, while the 364-day cleared lower by 10 basis point relative to the last auction.
In the currency market, Naira lost 0.21% or 21 kobo to close at N411.83 on Thursday in the Investors and Exporters window while the parallel market closed flat at N502.00, close to the N500 perceived exchange rate ceiling.
T-Bill Rate Rise as Investors Adjust Portfolio Maturity Positions
