T-Bills Yield 3.45% Ahead of CBN Auction
Trading activities at the Nigerian Treasury Bills secondary market hibernates on Tuesday ahead of Central Bank primary market auction (PMA) tomorrow with the average yield flattish at 3.45%.
Tomorrow, the CBN is scheduled to conduct a Primary Market Auction to roll over T-bills maturities worth ₦94.00 billion across 91-day (₦1.55 billion), 182-day (₦11.88 billion), and 364-day (₦80.57 billion) tenors.
In the secondary market, some traction was seen mostly at the longer end of the curve – the Feb 2023 paper, according to Alpha Morgan Capital. Consequently, the average rate retained its prior position to close at 3.45% following declining spot rates at the previous auctions conducted by the apex bank.
The average yields across short-term, medium-term, and long-term maturities remained unchanged at 3.11 per cent, 3.42 per cent, and 3.74 per cent, respectively, according to FSDH Capital. Nigerian T-Bills 9-Feb-23 (+2 bps) maturity bill witnessed mild selling pressure, traders said in a market report.
Some fixed income market traders told MarketForces Africa that the CBN auction will see heavy subscriptions and they are expecting spot rates to remain volatile until fresh catalysts build up in the space to drive upward yield repricing.
They attribute the current market development to a healthy liquidity position and dearth of alternative investment options amidst a low-interest rate environment engineered by the apex bank after it banned non-banks and individuals from participating in the OMO market in the third quarter of 2019.
Speaking about the liquidity position the money market rates slope downward ahead of Friday’s FX auction which often has a run on the financial system.
Today, the average interbank rate dropped by 433 basis points to close at 4.84%, according to market data cited by Alpha Morgan Capital as open buyback and overnight lending rates declined.
Data from the FMDQ Exchange platform shows that the overnight lending rate decreased by 433 basis points to close at 5.17 per cent as against the last close of 9.50 per cent.
Also, the open buy back rate decreased by 433 basis points to close at 4.50 per cent compared to 8.83 per cent on the previous day.
FSDH Capital said in a note that as system liquidity has improved with OMO repayment of ₦106.22 billion, money market rates are likely to remain subdued, barring any mop-up activity by the CBN.
In the OMO bills market, the average yield across the curve closed flat at 3.92 per cent. The average yield across the long-term maturities remained unchanged at 3.92 per cent.
In the bond space, trading activities at the FGN bond secondary market ended on a bullish note, major of the activities was seen on the short to mid-end of the curve with the 2024s and 2026s maturities taking the bulk of said transactions, traders’ notes show.
However, Alpha Morgan Capital said traction was also witnessed on 2025, 2028, 2037, and 2042 maturities. Meanwhile, the average yield climbed by 3 basis points to close at 10.44% from 10.41 per cent on the previous day.
Average yield across the long tenor of the curve expanded by 9 basis points, while the average yield across the short tenor of the curve declined by 7 basis points. However, the average yield across the medium tenor of the curve remained unchanged.
The 14-MAR-2024 maturity bond was the best performer with a decrease in the yield of 18 bps, while the 18-APR-2037 maturity bond was the worst performer with an increase in the yield of 45 basis points.
Today, activities at the FGN Eurobond market reversed the bearish session from the prior session, following demands witnessed across the sovereign curve. In sum, the average yield was down by 13 basis points to close at 8.13%.
The DMO has started offering a 2-Year FGN Savings Bond due March 16, 2024, and a 3-Year FGN Savings Bond due March 16, 2024, at the interest rate of 9.470 per cent per annum and 10.470 per cent per annum, respectively.
The bond auction is scheduled to close on March 11, with settlement on March 16. The interest will be paid quarterly, with a redemption bullet repayment on the date of maturity. #T-Bills Yield 3.45% Ahead of CBN Auction
