Treasury Bill Yield Dips after Rate Repricing at CBN Auction
The average yield on Nigerian Treasury bills slumped four basis points (4bps) as investors raised their asset holdings after primary market auctions in the previous week.
The central bank raised spot rates on 364 day Nigerian Treasury bills by 18 basis points at the auction sales conducted last week. The decision was in contrast to previous spot rates pricing.
Fixed interest securities analysts and market traders said trading activities were low in the secondary market after the auction, though with bullish tilt, driving yield curve downward.
Lost bids at the apex bank auction filtered through the secondary market at the beginning as alpha seekers, asset managers maintain search for inflation protected investment options.
In its market update, fixed income analysts at Cordros Capital Limited reported that across the curve, the average yield declined at the short (-3bps), mid (-4bps), and long (-5bps) segments.
The yield contraction was attributed to demand for the 87-day to maturity bills which shed -3bps of the rally. Also, 178-day to maturity bills received investors’ attention, while its yield slumped by -4bps. Also, 325-day to maturity bills were mopped up, causing its yield to dip by 6bps.
Overall, the average yield on Nigerian Treasury bills declined by 4 basis points to 22% on Monday as analysts predicted inflation would begin to slow down from the current month – all things being equal.
In the OMO bills segment in the secondary market, the average yield also dipped by 5bps to 23.4% after the Central Bank of Nigeria (CBN) unfilled auction last week.
In the money market, Nigerian interbank offered rate rose across the board for all the maturities tracked as banks with liquidity sought higher rates, according to Cowry Asset Limited. Likewise, short-term benchmark rates, such as the Open Repo Rate (OPR) and the Overnight Lending Rate (OVN) widened to 25.19% and 25.82%. 248th Independence: U.S. Reiterates Commitment to Nigeria
