T-Bills Rally On Sizeable Market Liquidity, Yields Slump

T-Bills Rally On Sizeable Market Liquidity, Yields Slump

Fixed income investors resume buying bills in the secondary market for the local Treasury Bills market after weekend selloffs ahead of the Central Bank of Nigeria’s (CBN) primary market auction tomorrow.

Sizeable liquidity in the financial system pushes interest on short-term instruments higher. However, market investors have started to weigh the multiple impacts of rising inflation, and weak local currency on naira assets.

Last week, the Nigerian Treasury Bill started with notable selloffs, pushing the average benchmark yield to 6.46% on Monday. However, the market remained relatively quiet for the rest of the week with minimal activity. Overall, analysts at Futureview told investors that the average benchmark yield increased by 480 basis points (bps) to reach 6.22% for the week.

On Monday, the short-term benchmark rates adjusted downward to near lowest points again as local deposit money banks absconded from the CBN standing lending facilities to boost their liquidity profile.

The open repo rate and the overnight lending rate declined to 2.00% and 2.80%, respectively, compared to their previous levels of 2.90% and 3.40%. analysts said in their notes. >>Nigerian Treasury Bills Yield Rises to 7%

At the close of the trading session on Monday, the average yield on Treasury bills contracted by 11 basis points to 6.3% in the secondary market after market participants’ interest in the long end of the curve.

Cordros Capital Limited told investors in a note that across the curve, the average yield closed flat at the short and mid segments but contracted at the long (-19bps) end following buying interest in the 241-day to maturity (-187bps) bill. #T-Bills Rally On Sizeable Market Liquidity, Yields Slump