Treasury Bills Market Rallies after N1trn Unallotted Bids
The average yield on Nigerian Treasury bills shrank by an additional 27 basis points on sustained buying momentum in the secondary market after the main auction. The yield slumped as rejected subscriptions at the primary market auction flowed into the secondary market.
The Central Bank of Nigeria (CBN) had floated N250 billion in Treasury bills for investors’ subscription. Reflecting strong appetite, investors staked more than N1.3 trillion on the offer, but the authority rejected the huge excess that ran over N1 trillion.
Investors whose bids were rejected flocked to the secondary market on Thursday, and trading activities heated up across the short, belly, and long end of the curve. As a result of the buying momentum, the Treasury bill quoted price increased while associated yields declined by 27 bps to 19.1%, Cordros Capital Limited said in a note.
Investors’ interest in the short-dated local bills caused yield to decline by 19 basis points. At the belly of the curve, yield sloped down by 37 basis points, while the long end of the curve saw 25 basis points in yield contraction.
Fixed income market analysts said the yield drop at the short end was driven by the demand for the 91-day to maturity, which dropped by -145 bps. The lower yield at the belly of the curve was propelled by demand for Nigerian Treasury bills that will mature in 147 days, whose yield dropped by 154 bps.
The long-duration yield drop was driven by investors demand for Nigerian Treasury bills that is expected to mature in 245, recording a -292 bps decline in its yield line. Similarly, the average yield contracted by 66 bps to 24.4% in the OMO segment.
Some interest emerged for short-term bills, particularly the October/November Treasury bills and the new 1-year bill (9-July). Demand also picked up for January/March OMO papers.
Most trading focused on the 9 July bill, which cleared at 15.45%. Analysts anticipate that yield will continue to contrast as a result of healthy liquidity conditions in the money market. #Treasury Bills Market Rallies after N1trn Unallotted Bids Naira Gains N9 as Fresh Inflows Boost Foreign Reserves
