Treasury Bills Market Rallies After Spot Rates Slump
The average yield on the Nigerian Treasury bill (NTB) declined by four basis points in line with downward spot rates pricing at the Central Bank (CBN) mid-week auction sales.
The secondary market recorded bullish activities on treasury instruments, a trend that dragged the yield curve lower following a surge in prices at the over-the-counter segment. Banks switched into buying mode to release free cash against the CBN debits.
Traders said the average yield on treasury bills bumped by 4 basis points on Thursday to 6.8%. MarketForces Africa reported that at the CBN auction, liquidity level played a strong role in the demand level.
A relatively healthy subscription gave the monetary authority the opportunity to reduce spot rates across tenors, a pattern some fixed income analysts tag as financial repression since real return stays negative on high inflation conditions.
Stop rates for the 91-day Treasury bills declined to 2.29% from 4.55% at the CBN auction on Wednesday. A similar price down was spotted in 182-day bills that plunged to 4.99% from 6.44%. At the end of the curve, the spot rate for 364-day bills moderated to 7.99% from 8.99%.
In its market brief, analysts at Cordros Capital Limited said across the curve, the average yield closed flat at the short and mid segments but contracted at the long (-6bps) end following buying interest in the 287-day to maturity (-35bps) bill.
Cowry Asset Management said in a market brief that the Nigerian Interbank offered rate decreased across the board for all maturities tracked in the money market.
According to market analysts, a number of cash-rich local deposit money banks with liquidity demanded lower rates as liquidity level caused a slowdown in short-term benchmark rates.
The open repo rate (OPR), mellowed 8 basis points to 11.25%, while the overnight lending rate (OVN) remained unchanged at 11.50%, figures that were confirmed from the FMDQ Exchange platform. #Treasury Bills Market Rallies After Spot Rates Slump