Treasury Bills Yield Crosses 10%, Bond Hits 14.1%

Treasury Bills Yield Crosses 10%, Bond Hits 14.1%

The average yields on fixed interest securities rose on Thursday amidst selloffs in the local debt capital market amidst bucket of macroeconomic uncertainties.

With inflation rising to 20.77% in September, and benchmark interest rate of 15.5%, market analysts are hoping to see higher yield in the fourth quarter.

Analysts told MarketForces Africa that yields will rise further amidst plan to securitize ways and means funds obtained by the Federal Government from the Central Bank of Nigeria via issuance of government instruments.

Expectation that yields curve will see upward adjustment is connected to tightening liquidity position in the financial system following new market dynamics engineered by the apex bank fast and very furious hawkish tone.

On the downside, the CBN has begun to tighten access to discount window to authorised dealers, including banks, who are active players in primary market auctions. READ:Treasury Bills Yield Rises, FGN Bond Hits 10.75%

On Monday, demand for FGN bonds reopening fell through as a result of tight liquidity as banks have been barred to access discount window same day when they bid for any government instruments.

In the money market, short term rates declined, albeit, moderately on the back of slowdown in funding pressures. Data from FMDQ Exchange indicates that the overnight lending rate contracted by 17 basis points to 16.3%.

Market analysts told MarketForces Africa that the squeeze in the financial system liquidity is due to absence of any significant inflows from maturing instruments. In the Treasury bills market, trading activities were bearish as the average yield expanded by 20 basis points to 10.1%.

Across the curve, Cordros Capital analysts said in a market report that the average yield was flat at the short and long ends but expanded at the mid (+43bps) segment as participants sold off the 98-day to maturity (+300bps) bill.

Elsewhere, the average was unchanged at 10.3% in the OMO bills segment. In the bond market, trading activities ended with bearish sentiments on Thursday. The average yield expanded by 14 basis points to 14.1%.

Across the benchmark curve, analysts said the average yield expanded at the short (+16bps) and mid (+40bps) segments due to selloffs of the JAN-2026 (+38bps) and APR-2029 (+55bps) bonds, respectively. Conversely, the average yield was flat at the long end. At the Investors and Exporters FX window, the naira appreciated by 0.1% to N441.13.

# Treasury Bills Yield Crosses 10%, Bond Hits 14.1%#

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