Treasury Bill Hits by Selloffs after Two Failed OMO Auctions
Sell pressure witnessed in the secondary market has provoked a surge in the average yield on Nigerian Treasury bills, rising by seven basis points to 25.60, traders said in an emailed note.
Investors, local and foreign investors have been dumping assets due to uncertainties in the economy ahead of inflation figure for July. After staying elevated for longest time ever, analysts have predicted that consumer price index will retreat in July due to base effects.
Interest rate climbed to 26.75% over the decision to anchor Nigeria’s worrisome consumer price index which has peaked at 30-year high, break households aggregate spending and damaged corporate performance.
On Monday, the treasury bills market was mixed-to-bearish with selling interest predominantly seen across the mid to long dated papers. At the end of trading, the average mid-rate across the benchmark Nigerian Treasury bills increased due to sell pressures.
The average yield declined at the short (-4bps) and mid (-5bps) segments driven by buying interests in the 80 days to maturity bills, whose yield slumped by -4bps. The market saw buying interest also in 171 days to maturity in the secondary market, causing its yield to decline by -5bps.
Conversely, the average yield expanded at the long (+19bps) end due to profit-taking activities in the 325 days to maturity, causing its yield to rise by +173bps bill.
Similarly crunching selloffs was witnessed in the OMO bills market after two failed primary market auctions, suggesting foreign investors’ apathy to the borrowing instrument spurred by weak sentiment.
The average yield increased by 49 basis points on Monday to 25.8% in the OMO Bills segment in the fixed income securities markets. Naira Rises Against US Dollar by 0.61% to ₦1,607.15
