Treasury Bills Yield Crossed 25% Ahead of CBN Auction
The average yield on Nigerian Treasury bills rose sharply, up by more than 6%, as fixed interest securities investors sold their holdings in the secondary market.
The risk off sentiment triggered by liquidity squeeze among other market related issues caused trading activities to close negative amidst inflation concerns, expectation of further interest rate hike.
Money market rates surged significantly due to liquidity pressures experienced last week. As a result, short term interest rate benchmark rose above 30%.
The overnight (OVN) rate inched higher by 18bps to 30.3% following settle obligations for the net NTB issuances worth N802.19 billion and FGN bond PMA totaling N626.81 billion.
Investment banking firm Afrinvest Limited noted in its update the market direction was mainly influenced by the drop in market liquidity which was 1.2 trillion short as of Wednesday, April 17.
Some banks and other authorised dealers switched to bearish mood, with selloffs experienced on maturities across the curve. Consequently, average yield expanded 604 basis points to close at 25.17% from 19.13% recorded in the past week, Afrinvest said.
Traders noted that sell-offs were witnessed across all tenors, as average yield expanded by 790bps at the short end, up by 743bps at the belly of the curve and 450bps at the long end, respectively.
The yield on the 09-May-24 (+814bps), 12-Sep-24 (+773bps), and 24-Oct-24 (+656bps) maturities advanced the most, according to traders notes.
On Wednesday, the Central Bank is scheduled to roll over a total of ₦142.57 billion through the NT-bills Primary Market Auction across the 91-, 182- and 364-day Day Instruments. GTCO Sinks by 27% Over Rapid Selloffs
Analysts at Cordros Capital Limited envisage that possible Treasury bills issuance at the Wednesday auction may offset the expected inflows from FGN bond coupon payments worth N185.55 billion and keep the OVN rate elevated.
Across the market segments, the average yield advanced by 604 basis points to 25.2% in the NTB secondary market and increased by 25 basis points to 18.4% in the OMO segment. #Treasury Bills Yield Crossed 25% Ahead of CBN Auction
