Treasury Bill Yield Rises to 22%, Bonds Steadies
The average yield on Nigerian Treasury bills rose above 22% due to selloffs experienced in the secondary market before the workers day celebration holiday, while return on government bonds remained unchanged.
Debt market has seen influx of investors showing interest in local notes, paper and bills amidst hot red inflation rate which printed at 33.20% as of March. The unstable price level triggered monetary policy tightening despite the fact that the economy is already growth-starved.
Yield on Government’s long dated instrument and short term treasury bills inverted in the first quarter for the first time in a long time as market participant shifted their attention to higher interest rate offered by the monetary authority to mop up liquidity.
At an inverted points, yield on one year treasury bills and government bonds equate while inflation rate peaked at 30 years high as the Central Bank of Nigeria offered higher rates to attract FX inflows.
Despite the elevated yield, fixed interest securities investors are stilling earnings negative interest rate. Nigeria’s monetary policy rate was adjusted to 24.75% to fight inflation which settled at 33.20% – resulting to 8.45% gap.
On Tuesday, sentiments in the Nigerian Treasury bills secondary market turned bearish, as the average yield advanced by 3 basis points to 22.2%, said Cordros Capital Limited in its market update.
Traders explained that across the curve, the average yield pared at the short (-1bp) end driven by demand for the 72-day to maturity whose associated yield dropped by 2bps.
Yield however expanded at the mid (+13bps) and long (+1bp) segments following sell-offs of the 114-day to maturity, causing its yield to rise by +84bps. The market also witnessed 191-day to maturity selloffs, pushing its yield higher by +18bps.
Conversely, the average yield contracted by 1bp to 18.8% in the OMO bills segment in the secondary market, according to fixed interest securities analysts at Cordros Capital Limited.
In the money market, the interbank rate decrease 0.29%, closing at 30.64%, indicating improved liquidity conditions. However, key money market rates such open repo rate (OPR) and overnight lending rate (OVN) increased, to settle at 30.21% and 31%, respectively.
Specifically, the overnight lending rate expanded by 33bps to 31.0%, despite the inflows from OMO maturities worth N42.00 billion.
Proceedings in the FGN bond secondary market was calm, as the average yield was unchanged at 18.94%. Across the benchmark curve, the average yield increased slightly at the short (+1bp) end due to mild pressure on the JAN-2026 (+1bp) bond but closed flat at the mid and long segments Naira Suffers Big, CBN Goes Ballistic Against FX Whales
