T-Bills Muted as Selloffs Push FGN Bond Yield to 10.70%

T-Bills Muted as Selloffs Push FGN Bond Yield to 10.70%

The Nigerian Treasury bills market remains muted as average yield on Federal Government of Nigeria (FGN) bond traded in the secondary market inched higher six basis points to 10.70% on Thursday.

The increase in the average yield on bond instruments came following sustained selloff amidst economic uncertainties as Nigeria’s headline inflation rate projected to rise further.

However, trading activities in the Treasury bills space remain cold, and quiet as the yield was flattish due to thin transactions on the instruments. Nigerian Treasury bills space has been cold following persisted declining spot rates.

Since the beginning of the year, spot rates have been on the decline at the Central Bank of Nigeria, CBN, primary market auctions. The trend has been attributed to strong subscription levels amidst a lack of alternative investment options in the financial markets.

Consequently to a muted trading session in the Nigerian Treasury bills market, the average rate remained flattish at 3.17%, traders said in market notes. A similar scenario played out at the CBN open market operations.

Market results show that the average yield in the OMO segment stayed flat at 3.6% as pressures on the financial system liquidity eased today.

As a result, the average interbank rate dropped by six basis points to close at 12.44%. Data from the FMDQ Exchange shows that the Open Buy Back rate climbed by 5 basis points to 12.38%. Also, the second leg or the overnight lending rate slipped 17 basis points to 12.50%, respectively.

Trading in Treasury bills secondary market was a lull, as the average yield remained unchanged at 3.2%, traders at Cordros Capital said in a note.  Fixed income traders’ notes show that the average yield expanded six basis points to 10.70%.

However, it was noted that across the benchmark curve, the average yield expanded at the short (+8bps) and mid (+20bps) segments as investors sold off the MAR-2025 (+32bps) and FEB-2028 (+25bps) bonds, respectively, but was flat at the long end.

Trading activities at the FGN Eurobond market was mostly bearish following sell-side pressures across the sovereign curve except for the Jun-2022 instrument that saw some demands, Alpha Morgan capital said in its note.

Traders’ notes indicate that the average yield on FGN Eurobond was up by 8 basis points at the international debt capital market to close at 8.12%. #T-Bills Muted as Selloffs Push FGN Bond Yield to 10.70%

READ: Fixed Income Market Records Quiet, Soft Trading Session