T-Bills Yield Rises to 11.2%, Bond Pops 2 Basis Points
Godwin Emefiele, CBN Gov

T-Bills Yield Rises to 11.2%, Bond Pops 2 Basis Points

The average yield on Government instruments spiked as the Nigerian naira traded steady against the United States dollar in the Investors’ and Exporters’ foreign exchange window. The naira was flat at N441.67 at the official window. The yield has surged after inflation and interest rate surge in the third quarter of 2022.

In the latter part of the year, market analysts hope to see further yield repricing amidst buckets of budding market catalysts – Nigeria is expected to securitise N20 trillion overdraft from the Central Bank while low liquidity disrupts subscription level in the FGN bond market, which means more bonds raise will happen in the year.

This is expected to raise spot rates across short and long-tenor instruments, both FGN Bonds and Nigerian Treasury bills are expected to increase, analysts told MarketForces Africa.

In the money market, short-term rates faced no additional pressures, according to data from the FMDQ Exchange platform. The overnight lending rate was unchanged at 16.5%, as the average system liquidity remained at a net short position, closing at N146.42 billion, Cordros Capital said in a market note.

Amidst the CBN auction, the Treasury bills secondary market closed on a bearish note, as the average yield expanded by 9 basis points to 11.2%. Across the curve, analysts stated that the average yield pared at the short (-1bp) end following mild interest on the 15-day to maturity (-1bp) bill.

However, there was a yield expansion at the long (+26bps) end due to profit-taking on the 323-day to maturity (+188bps) bill. READ: NGX Pops as Investors Position in Fundamentally Strong Shares

The average yield was unchanged at the mid-segment. In the OMO bills segment, the average yield stayed flat at 10.2%. Activities in the FGN bond secondary market remained bearish, as the average yield expanded by 2 basis points to 14.3%.

Across the benchmark curve, the average yield inched higher at the short (+2bps) and long (+4bps) ends as investors sold off the FEB-2028 (+14bps) and APR-2037 (+25bps) bonds, respectively. Conversely, the average yield was flat at the mid-segment. #T-Bills Yield Rises to 11.2%, Bond Pops 2 Basis Points