T-Bills Yield Slides to 8.28% Ahead of CBN Auction

T-Bills Yield Slides to 8.28% Ahead of CBN Auction

The average yield on Nigerian Treasury bills (NTB) jerked down, reversing the selling rallies ahead of the Central Bank of Nigeria (CBN) midweek auction to refinance maturing bills worth more than N303 billion.

Rising liquidity pressures triggered selloffs on Monday as local deposit money banks established fresh interest in CBN’s standing lending facility to support their funding profile.  According to analysts, most of the selloffs were seen at the belly and long end of the curve amidst the expectation that spot rates on bills refinance would fall.

But again, a twist in liquidity levels is expected to drive spot rates higher at the auction following bondholders’ apathy at Debt Management Office primary market auction sales – the demand level could be replicated except the apex bank offered attractive rates.

On Tuesday, the money market saw an increase in Nigerian Interbank Offered (NIBOR) rates across all tenor buckets due to a sustained liquidity squeeze, Cowry Asset Management told investors in an update.

Across the curve, Cordros Capital said the average yield declined at the short (-73bps) end as participants demanded the 65 days to maturity (which lost 293bps) bill.

The yield expanded at the long (+6bps) end due to the selloff of the 338 days to maturity (+79bps) bill. Conversely, the average yield was flat at the mid-segment. Elsewhere, the average yield was unchanged at 11.2% in the OMO segment.

The investment firm said the three-month NIBOR rate witnessed an increase of 19 basis points, reaching 13.50%. Key money market rates, including the open repo rate and the overnight lending rate, ticked upwards as pressures mounted on liquidity.

The repo rate surged 130 basis points to 23.80%. Also, the overnight lending rate rose to 140 basis points 24.70%. Ahead of CBN auction sales on Wednesday, the average secondary market yield on Treasury bills moderated to 8.28%. #T-Bills Yield Slides to 8.28% Ahead of CBN Auction Naira Steadies as Banks Issue Update on FX Purchase