Treasury Bills Yield Falls as Liquidity Pressure Ease
The average yield on Nigerian Treasury bills settle lower over increased demand for bills in the secondary market ahead of midweek primary auction. Liquidity concerns in the financial system had triggered massive selloffs, which raised yield upward by more than 6% last week.
Information obtained from FMDQ Securities Exchange revealed that liquidity level in the money market increase, though funding rates diverge as banks queue at the Central Bank Standing Lending Facility to meet their daily funding demand.
Data from the money market showed that short term benchmark interest rates diverge, as there was no significant inflows into boost liquidity level strongly.
The overnight lending rate contracted by 21 basis points to 30.8%, in the absence of any significant pressures in the system. On the other hand, pen repo rate witnessed a 7 basis points increase to settle at 29.96%.
Analysts expected short term benchmark interest rates to rise sharply this week on expected effects of Central Bank of Nigeria Treasury bills primary market auction.
Treasury bills buying in the secondary market caused the average yield to contract by 7 basis points to 25.1% on Wednesday, according to Cordros Capital Limited.
Traders said in the market update that across the curve, the average yield increased at the short (+77bps) end. This was due to sell pressures on the 16-day to maturity whose yield rose by +391bps.
Yield dipped at the mid (-2bps) and long (-44bps) segments driven by interests in the 156-day to maturity (-2bps) and 226-day to maturity (-511bps) bills, respectively. Elsewhere, the average yield advanced by 41bps to 18.8% in the OMO bills segment in the secondary market.
Trading activities on The FGN secondary bond market was bullish. Fixed interest securities investor interests were seen at the short to mid-segment of the yield curve. Notably, activity was evident in the 22-Jan-26 (-72bps), 20-Mar-26 (-56bps), 20-Mar-27 (-58bps) and 27-Apr-32 (-16bps) instruments. Consequently, the average yields dropped by 7 bps to 18.97%. Naira Devaluation Deepens Economic Crisis in Nigeria
