Treasury Bills Yield Crash to 21% on Increase Demand
The average yield on Nigerian Treasury bills declined further in the secondary market due to increased demand for the naira asset. The average yield contracted by 12 basis points, according to fixed income market analysts who maintained that disinflation has boosted investors’ sentiment ahead of fourth quarter primary market auctions.
In a note, the Central Bank of Nigeria said N2.2 trillion worth of Nigerian Treasury bills will be refinanced in the fourth quarter of 2024. Rates on Nigerian Treasury bills remain high, though the recent past auctions have seen some pricing swings across standard tenors.
The gap between benchmark interest rate (26.75%) and inflation reading for July (33.40%) has now collapse to 6.65%, reducing negative interest yield on investment in the fixed income market.
In a note, Cordros Capital Limited told investors that the average yield dipped at the short (-1bp), mid (-1bp), and long (-25bps) segments. The yield contraction was driven by bargain hunting in the 87 days to maturity, whose yield dipped by 1 bp.
Buying interest in 164-day to maturity dragged yield lower by -2 bps at the belly of the curve. Also, investors interest in 213-day to maturity Treasury bills caused the yield on the asset to reduce by 260 bps. Similarly, the average yield declined by 45 bps to 24.0% in the OMO segment. Interest Rate on Nigerian Treasury Bill Spikes to 21.45%
