Treasury Bills Yield Dips on Increase Demand for Naira Asset
The average yield on Nigerian Treasury bills dipped slightly in the secondary market due to increased demand for naira assets, restricted by tight liquidity which capped trading actions.
The Treasury bills market remained stable, with limited trades occurring in select maturities, especially in the mid and long-dated securities on Tuesday ahead of inflation data.
The statistics office is expected to release inflation report for Oct weekend and analysts have expressed different views on the direction of consumer price index.
Mostly, inflation rate has been projected to rise further and Fitch Ratings is of the view that the Central Bank of Nigeria will maintain hawkish pose in its last policy committee meeting in 2024.
Investors continue to anticipate a better return on asset after inflation reversal widened real return on investment in Sept. But demand for naira assets has remained positive.
With the buy momentum, the average yield pared by a basis point as analysts noted that demand was seen at the long end of curve. However, trading activity remained subdued due to ongoing liquidity constraints, with only few trades consummated, traders said.
Yields moderated slightly across the curve, with the 4-Sep and 9-Oct maturities both dropping by 2bps, TrustBanc Capital Limited told investors in a note.
Overall, the average benchmark yield declined by 1bp, closing at 24.22, analysts said, projecting that trading session would remain quiet for the rest of the week as investors trade in line with prevailing liquidity conditions.
In the money market on Tuesday, there was about N160 billion deficit balance in the banking system due to absence of significant inflows from maturing instruments. This week, the market expects inflows from FG coupon and swap.
Explaining the situation in the treasury bills market, analysts at Cordros Capital Limited said the average yield expanded at the mid (+7bps) segment driven by the selloff of the 100-day to maturity whose yield rose by +59bps.
There was yield contraction at the short (-1bp) and long (-2bps) ends following buying interests in the 86-day to maturity (-2bps) and 345-day to maturity bills (-2bps) respectively.
Similarly, the average yield expanded by 21bps to 26.5% in the OMO bills segment in the secondary market. #Treasury Bills Yield Dips on Increase Demand for Naira Asset Oil Rises on Middle East Tensions, OPEC+ Output Decision
