Treasury Bill Yield Climbs as Banks Trim Holdings
The average yield on Nigerian Treasury bills increased in the secondary market as local deposit money banks reduced their holdings due to tight liquidity condition. Shortage of funding in the money market provoked selloffs across tenor ahead of the refinancing of maturing bills on Wednesday.
Subsequently to a bearish outing, the average yield across all instruments advanced by 83bps to 23.4%, said Cordros Capital Limited in an investors note.
Traders said across the market segments, the average yield expanded by 69bps and 91bps to 22.8% and 24.4%, respectively, at the Nigerian Treasury Bill and OMO Bills segments in the fixed income market.
“We believe the sustained dearth in the system liquidity will continue to undermine demand for instruments in the T-bills secondary market, causing yields to expand further”, Cordros Capital told investors.
The Debt Management Office on behalf of the Central Bank is scheduled to hold primary market auction for Nigerian Treasury bills Wednesday, where it will roll over N166.11 billion worth of maturing bills.
The treasury bills market closed the week bearish, due to tight system liquidity. Consequently, the average mid-rate increased by 96bps week-on-week, to 21.43%.
In the money market, the Nigerian interbank offered rate increased marginally by 0.03% to reach 32.43%, as banks with liquidity sought for higher rates on Friday.
System liquidity stayed short throughout the week, impacted by FX Settlement, CRR debits and other outflows. Thus, the Open Repo Rate (OPR) and the Overnight Rate (O/N) increased significantly by 789 bps and 753 bps to 32.06% and 32.53% week-on-week. Samoa Agreement had Nothing on Gay Rights, $150 bln Deal – FG
