Traders See Muted Yield as Investors Focus on T-Bills Auction
Fixed income traders see muted yield in the Nigerian Treasury bill secondary market on Wednesday as market participants, investors shifted their focus to Central Bank (CBN) primary market auction (PMA).
At the Primary Market Auction held today, the CBN offered Nigerian Treasury Bills worth ₦118.73 billion across 91-day (₦3.54 billion), 182-day (₦4.12 billion), and 364-day (₦111.07 billion) tenors.
Today, short term interest rates slow down again in the money market in the absence of strained financial liquidity. The average interbank rate dropped by 643 basis points to close at 9.09%.
Tracked data from the FMDQ Exchange platform shows that the overnight lending rate declined by 6.52 per cent to close at 9.50 per cent as against the last close of 16.02 per cent.
Similarly, the Open Buy Back (OBB) rate decreased by 6.33 per cent to close at 8.67 per cent compared to 15.00 per cent on the previous day.
With a bearish tilt, the Nigerian Treasury Bills secondary market closed on a flat note with the average yield across the curve remaining unchanged at 5.10 per cent. The market has been cold since the beginning of the week due to CBN monetary policy committee meeting.
Trading data from analysts’ notes show that average yields across short-term, medium-term, and long-term maturities closed flat at 3.95 per cent, 4.80 per cent, and 5.81 per cent, respectively.
In the open market operation market where OMO bills were traded, the average yield across the curve closed flat at 5.50 per cent, FSDH Capital note indicates.
Analysts stated that average yields across short-term, medium-term, and long-term maturities remained unchanged at 5.37 per cent, 5.54 per cent, and 6.15 per cent, respectively.
In a related development, Federal Government (FGN) bonds secondary market closed on a mildly positive note today, as the average bond yield across the curve cleared lower by 4 basis points to close at 8.39 per cent from 8.43 per cent on the previous day, according to FSDH Capital.
The average yield across the short tenor of the curve declined by 7 basis points. However, analysts said the average yields across medium tenor and long tenor of the curve expanded by 7 and 2 basis points, respectively.
The 27-APR-2023 maturity bond was the best performer with a decrease in the yield of 27 basis points, while the 26-APR-2029 maturity bond was the worst performer with an increase in yield of 15 basis points.
Today, the Nigeria local currency, naira, falls again. At the investors and exporters foreign exchange window market, the naira depreciated by 0.06 per cent as the dollar was quoted at ₦415.07 against the last close of ₦414.80.
Most participants maintained bids between ₦404.00 and ₦450.50 per dollar, FSDH Capital said. # Traders See Muted Yield as Investors Focus on T-Bills Auction