T-Bills Market Rallies after CBN Sold 364-day at 9.90%
Trading activities in the Nigerian Treasury bills (NTB) secondary market experienced an increase in demand from local investors after the spot rates on tenored instruments sold by the Central Bank of Nigeria (CBN) spiked.
The apex bank conducted a primary market auction on Wednesday to mop up liquidity from maturing bills amidst uncertainties in the economy. The auction result indicated that demand or subscription level was healthy and the apex bank priced rates higher to compensate for the rising inflation rate.
The stop rate for the 91-day bills settled at 3%, rising from 0.1% at the previous auction. Also, the CBN priced 182-day bills at 3.24%, from 0.3% and 364-day bills were sold at 9.90%, up from 2.24% at the previous auction.
In the secondary market, trading activities closed on a bullish note on Thursday. Consequently, the average yield contracted by 13 basis points to 3.9%. Across the curve, the average yield declined at the short (-30bps) end as participants demanded the 91-day to maturity (-207bps) bill.
However, the yield was flat at the mid and long segments on account of thin trading. Elsewhere, the average yield remained at 3.8% in the OMO bills segment. In the money market, short-term rates spiked as liquidity levels in the financial system reduced drastically, especially when the market was debited for about N771 billion for the FGN bond auction in the month.
Due to strained liquidity in the financial system experienced recently, the interbank and other short-term rates had surged to double-digit highs while cash-rich local banks demand higher rates for funds.
Today, market data shows that the overnight lending rate contracted by 175 basis points to 10.8%, following the inflow from FGN bond coupon payment worth N66.82 million. Analysts predicted that yield will surge as liquidity level in the financial system decline.
#T-Bills Market Rallies after CBN Sold 364-day at 9.90%
