T-Bills Rate Inched Higher as Fixed Income Market Stays Quiet
Amidst liquidity in the financial system, the Nigerian Treasury Bills (T-Bills) rate inched higher 70 basis points to 5.76%, according to Alpha Morgan Capital, as activities in the secondary market closed on a bearish note.
The development comes as a blood bath continued for 5-trading sessions in the local bourse. Due to sell-off pressure, the Nigerian stock market year-to-date losses widened to about 5% as the all-share index tumble to a 3-month low.
Fixed income analysts maintained that sentiments in the fixed income market were mostly bearish, particularly in the Nigerian Treasury Bill and secondary bond market.
On average, the Nigerian Treasury Bill benchmark curve expanded by 24 basis points (bps) to close at 5.15% while the Federal Government of Nigeria (FGN) bond benchmark curve expanded by 8bps to close at 13.26%, analysts at Chapel Hill Denham said in a report.
However, the open market operations (OMO) benchmark curve was flattish on average, which analysts said is a reflection of an ongoing quiet trading session in the market.
Most fixed income investors are currently waiting on the sideline until after the outcome of the Central Bank of Nigeria’s (CBN) monetary policy committee (MPC) meeting scheduled for next week.
Next week Thursday, the CBN will auction N24.2 billion (91-day), N19.2 billion (181-day), and N19.8 billion (364-day) worth of treasury bills.
Recalled that the previous auction cleared at 2.5%, 3.5%, and 9.75% for the 91-day, 181-day, and 364-day respectively.
At the primary market auction this week, the Debt Market Office offered ₦150 billion and sold ₦175.24 billion. Total subscription came in at ₦281.97 billion, a subscription rate of 1.88x.
Meanwhile, the Nigerian local currency, naira, declined by 0.17% or 17 kobo against the United States dollar (USD) to close at N412.00 in the Investor & Exporter (I&E) window.
Also in the parallel market, the local currency shed 0.21% or 21 kobo against the USD at N485.00 as external reserves extended its decline, closing at US$34.35 billion on 20th May, a decline of -0.44% in a week.
Funding rates in the money market, the open buyback, and the overnight rates, spiked by 1.50 and 1.75 percentage points to settle at 16.50% and 17.00% respectively.
Chapel Hill Denham said in a report that financial system liquidity closed at a deficit of N577.6 billion on Friday against N270.3 billion on Thursday, partly due to the settlement of the May bond auction.
“There was increased activities in the Standing Lending Financing window of the CBN to accommodate the demand pressure. Next week, we expect improvement in liquidity on the back of the N110 billion OMO maturity due on Tuesday, 25th May”, analysts said.
T-Bills Rate Inched Higher as Fixed Income Market Stays Quiet
