T-Bills Yield Prints at 3.45% as Spot Rates Fall
Trading activities at the Nigerian Treasury Bills (NTB) secondary market ended on a bullish note last week, as traction was seen at the longer end of the curve, according to traders’ notes.
As a result, the average yield dropped by 14 basis points to close at 3.45% following spot rates price down at the previous Central Bank of Nigeria (CBN) primary market auctions (PMAs).
CBN Auctions results tracked show that there has been price down on spot rates at the previous auctions conducted by the apex bank due to hefty subscription levels driven by healthy liquidity.
Fixed income traders said the Treasury bills market maintained bullish run for the fourth consecutive weeks due to significant improvement in system liquidity. Free funds seeking investment opportunities rested at the treasury market, raising demand while yields swings downward in reaction.
Traders note show that the average yield across short-term and medium-term maturities closed flat at 3.11 percent and 3.42 percent, respectively. NTB 26-Jan-23 (+16 bps) maturity bill witnessed selling pressure, while the yields on 9-day to maturity bills remained unchanged.
During the week, net average position significantly increased to N326.39 billion from N69.72 billion last week and local banks’ objective to re-invest idle cash, according to Cordros Capital Limited.
Consequently, the average yield across all instruments declined by to 3.4%. In the coming week, Cordros Capital traders expect the outcome of the NTB auction to shape the direction of yields in the T-bills market.
The CBN is set to roll over N94.00 billion worth of maturities to market participants at the auction this week. READ: Treasury Bills Yield Prints at 5.14%, Naira Steadies Again
In the money market, short term rates adjusted upward due to a strained liquidity position, according to traders’ reports. The overnight lending rate increased by 11.08 percent to close at 13.83 percent as against the last close of 2.75 percent.
Also, the Open Repo rate increased by 11.33 percent to close at 13.33 percent compared to 2.00 percent on the previous day. FSDH Capital said money market rates increased by an average of 1121 basis points following the FX retail auction by the CBN.
In the OMO bills market, the average yield across the curve closed flat at 3.92 percent. Average yield across the long-term maturities remained unchanged at 3.92 percent.
The CBN held an OMO auction on March 3, selling bills worth ₦30.00 billion across the 89-day (₦5.00 billion), 173-day (₦5.00 billion), and 348-day (₦20.00 billion) tenors with the stop rates remaining unchanged at 7.00 percent, 8.50 percent, and 10.10 percent, respectively.
The auction was oversubscribed, indicating a subscription level of 1066 percent (₦319.75 billion). Demand was skewed towards long tenor maturity bills with bid-to-cover ratios settling at 8.35x (89-day), 10.05x (173-day), and 11.39x (348-day).
“In the new week, T-bills worth N204.00 billion will mature via the secondary markets to exceed T-bills worth N94.00 billion which will mature via the primary market; viz: 91-day bills worth N1.55 billion, 182-day bills worth N11.88 billion and 364-day bills worth N80.57 billion”, according to Cowry Asset Limited.
Traders said they expect the stop rate to marginally decline amid fresh liquidity boost from the maturing bills and the bias of CBN for an expansionary policy. #T-Bills Yield Prints at 3.45% as Spot Rates Fall
