Treasury Bills Rally, Average Yield Declines to 21.7%
The average yield on Nigerian Treasury bills crashed to 21% in the secondary market on Tuesday following an increased position across the curve. The buying momentum was supported by a surge in liquidity levels following inflows from matured OMO bills in the market.
A total sum of N37.05 billion inflows from OMO maturities boosted liquidity levels and thus, reduced funding pressure.
Consequently, the short term benchmark interest rate in the money market reacted positively as liquidity levels in the financial system improved strongly – hence, funding rates cleared below 29%, – lowest level seen since monetary policy rate adjustment.
Interbank rates, open repo rate (OPR), and overnight lending rate (OVN) declined by 1.24% and 1.32% to settle at 27.94% and 28.50%, respectively. The impacts of improved conditions partly raised investors’ appetites in the Treasury bills space.
Due to buying sentiment, the average yield on Nigerian Treasury bills pared by a basis point to 21.7%, according to investment firm, Cordros Capital Limited.
Across the curve, the average yield decreased at the short (-1 bp), mid (-1 bp), and long (-2 bp) segments. Traders relate the yield contraction to bargain hunting in the 79-day to maturity bills whose yield dipped by -1 bp.
Also, investors increased their appetites for 170-day to maturity bills, causing its yield to slide by -1 bp. Demand for 324- days to maturity also dragged its yield lower by 2 bps.
Likewise, the average yield pared by 1 bp to 21.4% in the OMO bills segment in the secondary market on Wednesday after an OMO auction conducted by the Central Bank. #Treasury Bills Rally, Average Yield Declines to 21.7% VFD Opens N6bn Commercial Papers for Subscription at 24.562%
