T-Bills Yield Dips 11bps as Liquidity Pressures Ease
The average yield on Nigerian Treasury bills (T-Bills) slumped by 11 basis points (bps) as a result of increased buying momentum in the secondary market. Treasury bill buying was supported by a decline in liquidity pressures, which dragged funding rates in the money market lower.
Liquidity pressure moderated in the system as the open repo and overnight lending rates contracted by about 8.00 per cent points each to print at 15.83% and 16.71%, respectively, data from FMDQ show.
Analysts said the contraction was primarily led by the N136.1 billion FGN bond coupon inflows, which hit the system on Monday. With an improved funding profile, trading activities in the secondary market ended on a bullish note. The average yield declined by 11bps to 7.9%.
The treasury bills market rallied despite the fact that rising headline inflation in the market has negatively impacted real return on investment in government instruments.
Investors hope to see higher returns, debt agencies are keeping tabs on spot rates to reduce government borrowing costs. Market critics said the financial repression remains a disincentive to interest in government borrowing instruments in the fixed income market.
In its market update, Cordros Capital told investors that across the curve, the average yield declined at the short (-111bps) end as participants demanded the 66-day to maturity (-138bps) bill.
However, yield expanded at the mid (+38bps) and long (+2bps) segments due to the sell-off of the 178-day to maturity (+85bps) and 192-day to maturity (+72bps) bills, respectively. Elsewhere, the average yield expanded by 14bps to 13.4% in the OMO segment, the investment firm said. #T-Bills Yield Dips 11bps as Liquidity Pressures Ease
