T-Bills Yield Steadies Amidst Sharp Decline Short Term Rates
In the secondary market, the average yield on Nigerian Treasury bills (NTB) remained unchanged as robust liquidity in the financial system dragged money market rates lower further. The liquidity glut has continued to impact subscriptions at the apex bank auction.
Not minding a steep inflation condition, in addition to a 700 basis points increase in benchmark interest rate, Nigeria’s government has been paying negative interest on its borrowing instruments.
The financial repression has, however, forced foreign investors out of the space. In spite of that, there has been solid demand for government instruments in 2023 amidst a dearth of alternative investment options, driven by institutional buying interest.
Traders also noted that there have been intermittent declines in demand levels at the auction but yield repricing has been weak despite changing market dynamics. In the money market yesterday, analysts record showed that short-term benchmark rates maintained downward trend, thanks to sizeable funding profile in the financial system.
Specifically, the open repo and overnight lending rates fell to 1.36% and 2.14% from their previous 2.00% and 2.80% levels. The absence of local banks in the central bank of Nigeria’s standing lending facility supported low sell-down in treasury bills holding ahead of the primary market auction.
After a thin trading session based on proceeding in the market, fixed income analysts said the average secondary market yield on Nigerian Treasury bills was steadied at 6.34%.
In the bond space, trading activities on FGN bonds were bullish for the majority of maturities tracked by Cowry Asset Limited, driven by buying interest, particularly for short and mid-dated bonds, which led to a contraction in the average yield in the secondary market to 12.47%.
The investment firm told investors that the 23 MAR 2025 paper was richer by 360 basis points, leading Tuesday gainers’ record. Additionally, the 10-year costs yielded around 13.17%, 76 basis points from 13.93%. Also, 30-FGN Bond saw its yield decline by 28 basis points to 14.69% from 14.97%. Meanwhile, the 20-year paper hovered around 14.99%, up from 14.68%.
Elsewhere, the value of FGN Eurobonds closed higher across all maturities, Cowry Asset said in its note to investors. Consequently, the average secondary market yield contracted to 11.93%. #T-Bills Yield Steadies Amidst Sharp Decline Short-Term Rates