T-Bills, Bond Yields Track Lower on Sell Pressures
The average yields on fixed income securities track lower on Monday amidst sell pressures on debt capital market instruments while the financial market liquidity position improves.
In the money market, short-term rates were down after popping high in the past week due to a strained liquidity position. Last week, there were inflows into the fixed income market from maturing bills, thus helped lifted financial system liquidity.
There was an inflow from FGN bond coupon payments worth N66.82 billion and OMO maturities totalled N45.00 billion last week. In a market note, traders at Cordros Capital said despite that system liquidity remained under pressure last week.
Liquidity settled at an average net short position of N70.07 billion as against a net short position of N78.80 billion in the previous week, according to Cordros Capital. READ: Demand to Increase as FGN Eurobond Yields Track Higher
Data from FMDQ Exchange shows that the overnight lending rate contracted by 367 basis points to 10.0%, a level that analysts at Cordros Capital attributed to the absence of any significant funding pressure on the system. Hence, trading in the Nigerian Treasury Bills secondary market was mixed, albeit with a bullish tilt as the average yield pared by one basis point to 7.8%.
Across the curve, the average yield contracted at the short (-1bp) and mid (-1bp) segments due to buying interests on the 45- day to maturity (-1bp) and 164-day to maturity (-1bp) bills, respectively; but was flat at the long end. Similarly, traders said the average yield contracted by a basis point to 11.1% in the open market operations (OMO bills) segment.
A similar trading scenario played out in the Federal Government Bond market. Today, trading activities on government bonds in the secondary market ended with bullish sentiments, as the average yield contracted by 3 basis points to 12.7%.
Across the benchmark curve, traders explained that the average yield contracted at the short (-8bps) end as investors demanded the MAR-2024 (-35bps) bond, but closed flat at the mid and long segments.# T-Bills, Bond Yields Track Lower on Sell Pressures
