T-Bills Steady, Low Liquidity Drives Interbank Rate Up
The average yield on Nigerian Treasury bills remain steadied on Tuesday due to thin trading activities in the secondary market ahead of the primary market auction (PMA) by the Central Bank of Nigeria –CBN.
At the Nigerian Treasury bills auction scheduled for Wednesday, the apex bank will be rolling over N264.28 billion worth of instruments and analysts are expecting spot rates to inch higher again.
At the last auction, spot pricing on 364-day Nigerian Treasury Bills advanced to seven per cent. With pressures on financial system liquidity, it is more likely to see higher spot rates at the CBN auction, analysts told MarketForces Africa.
Market participants’ focus was shifted to the scheduled Nigerian Treasury bills auction; thus triggering a light trading session that resulted in a flattish yield curve, maintaining an average yield position of 7.20 per cent.
The trading pattern was similar across segments as the open market operation (OMO Bills) space experienced a quiet and cold session that kept the average yield in check at 8.9 per cent
Meanwhile, short-term rates in the money market saw a one-sided uptrend on Tuesday. Sustaining their previous positions, money market rates spike amidst low inflows into the financial system liquidity.
Nigerian financial system liquidity position has been strained in the recent time in the absence of significant inflow into the space. According to FMDQ Exchange data obtained, the average interbank rate climbed by eight basis points to close at 15.00 per cent.
This was supported by an increase in open buy back rate, though the overnight lending rate remained steady as Nigerian banks positioned at the Central Bank of Nigeria’s standing lending facility (SLF) to raise funds.
Market data shows that on Tuesday, the Open Buy Back rate inched upward by seventeen basis points to close at 15 per cent. On the contrary, the overnight lending rate was steadied, albeit at a double-digit level of 15.00 per cent as banks seeks more funding from SLF.
Meanwhile, proceedings in the Nigerian government (FGN) bond secondary market ended on a mixed note as the average yield was slightly up a basis point to close at 11.87 per cent.
Across the benchmark curve, Cordros Capital said in a market report that the average yield was flat at short and mid segments but expanded at the long (+1bp) end as investors sold off the MAR-2036 (+10bps) bond.# T-Bills Steady, Low Liquidity Drives Interbank Rates Up
