T-bills Yield Steadies as Naira Trades Strong
The average yield on Nigerian Treasury Bills (NTB) steadied midweek due to a thin trading session as inflation pressures lessen real return on investment in the fixed income market.
In the investors and exporters foreign exchange (FX) window, data from the FMDQ Exchange platform showed that the Nigerian local currency, the naira, appreciated by 0.1 per cent on Wednesday.
Currencies traders are expecting the naira to be devalued in 2022, saying the local means of exchange is already overvalued. In the parallel market, the naira was traded at N588, with a widening gap between official and other markets rates.
In the investors’ window, the naira appreciated N416.50. In the money market, the average interbank rate faced liquidity pressures in the financial system – both open buy back and overnight lending rates jerked up accordingly.
Specifically, the overnight lending rate expanded by 217 basis points to a single-digit high of 8.5%, according to market data tracked by traders. With cautious outings in the fixed income segment, activities in the Treasury bills secondary market were quiet on Wednesday.
The average yield stayed flat at 3.2%. Similarly, the average yield in the open market operations (OMO) segment was flat at 3.6%. At the last OMO auction conducted by the monetary authority to mop up funds from the economy, spot pricing was steadied across tenors.
Though, other segments of the financial markets experience spot rates adjustment in the primary market auctions conducted early in the month. In the Federal Government of Nigeria (FGN) bond segment, trading activities closed mixed, although with a bearish tilt, according to Cordros Capital Limited.
The average yield expanded slightly by 2 basis points to 10.7%. Across the benchmark curve, traders said the average yield pared at the short (-1bp) end following buying interest on the APR-2023 (-2bps) bond.
The yield curve expanded at the long (+4bps) end as investors sold off the MAR-2036 (+17bps) bond. Conversely, the average yield was flat at the mid-segment. #T-bills Yield Steadies as Naira Trades Strong
