T-Bills Yield Rises to 8.5% as CBN Defers Meeting
Due to selloffs, the average yield on Nigerian Treasury bills (NTB) rose by 59 basis points to 8.46% on Thursday as the Central Bank of Nigeria (CBN) announced an indefinite postponement of its policy committee meeting.
Consequently, there were selloffs on the short and long end of the curve amidst uncertainties in the economy. In the previous day, tight liquidity in the financial system also drove the bearish trading activities in the local bills in the secondary market amidst inflation pressure on real return.
In the money market, there was no indication that there was pressure in the liquidity level as the funding rate or short-term interest rate dipped. Local deposit money bank borrowing activities at the CBN Standing Lending Facility remain minimal.
In its market report, Cowry Asset Managers said the Nigeria Interbank offered rates crashed across all maturities due to FAAC inflow into the system and caused an improvement in system liquidity. The overnight and repo funding rates decreased by 0.69% points and 0.75% points to close at 3.21% and 2.5% respectively, according to data from FMDQ.
Given the liquidity position, trading activities in the NTB secondary market ended with bearish sentiments. The selloffs pushed that average yield upward by 59 basis points to 8.5%. Across the curve, analysts at Cordros Capital said the average yield advanced at the short (+115bps), mid (+91bps), and long (+24bps) segments.
This came following profit-taking activities on the 35-day to maturity (+118bps), 126-day to maturity (+108bps) and 189-day to maturity (+66bps) bills, respectively. Elsewhere, the average yield was unchanged at 13.4% in the OMO segment, according to analysts.