Treasury Bills Rate Crossed 4.2% as 384-Day Bill Projected to Rise

Treasury Bills Rate Crossed 4.2% as 384-Day Bill Projected to Rise

Average rates on Nigerian Treasury Bills crossed to 4.23% Friday as analysts projected that 364-day bill will mostly likely hit 10%. Though, the fixed income market traded largely flat but with a slight bullish bias, says analysts at Chapel Hill Denham in market report.

At the front end of the curve, the Nigerian treasury bills and open market operations (OMO) benchmark curves closed flat at an average of 4.23% and 7.16% respectively.

On the other hand, it was noted that bond yields moderated by an average of 3bps across the benchmark curve to 12.41%, driven by downward repricing of yields.

The market witnessed repricing in the inter-mediate falling 2bps to 12.72% and long 6bps to 13.59% end of the curve, analysts revealed.

Meanwhile, a rollover Nigerian Treasury Bills auction is scheduled to hold on Wednesday next week. The Debt Management Office (DMO), via the Central Bank of Nigeria (CBN), is expected to offer N88.5 billion at the auction.

This will be split across three tenors: 91-day (N11.4 billion), 182-day (N6.0 billion), and 364-day (N71.1 billion) bills.

The last auction cleared at 2.0%, 3.5% and 9.0% respectively as Chapel Hill Denham said investors are expected to test the DMO’s resolve, probably bidding the 364-day higher to 10% as against 9% offer at the last auction.

In the money market, the financial system liquidity remained broadly constrained. Market data showed that liquidity opened in the deficit of N279 billion, up from N134 billion on Thursday.

The increased market deficit was attributed to settlement of the mid-week bond auction (N158.0 billion) and CBN’s OMO auction worth N128.4 billion on Thursday.

Consequently, interbank funding rates increased further, as the Open Buy Back and Overnight rates closed higher by 121bps and 158bps to 15.88% and 16.75% respectively.

Next week, sizeable bond coupon payments are expected to hit the financial system, estimated at about N160 billion. Yet, analysts said they expect money market rates to remain elevated at double-digit, due to the strong possibility of liquidity mop-up by the CBN.

In a related development, the Nigerian local currency, Naira, continued to trade within a tight band at all segments of the foreign exchange (FX) market.

In the investors and exporters window, the local currency closed flat against the United States dollar at 410.00. Also, the exchange rate remained unchanged in the official and Secondary Market Intervention Sale (SMIS) segments at 379.00 and 380.69 respectively.

Read Also: Nigerian T-Bills Discount Rates Closed Flat as Naira Gains

However, in the parallel market, the Naira appreciated mildly by N1 or 0.2% against the USD to 485.00 as external reserves rise 0.9% month to date to US35.12 billion.

Treasury Bills Rate Crossed 4.2% as 384-Day Bill Projected to Rise