Treasury Bills Yield Rises 20bps on Risk-Off Sentiment
The benchmark yield on Nigerian Treasury Bills has expanded further amidst selloffs pressures in the secondary market. At the close of the trading session on Wednesday, the yield shifted upward by 20 basis points to 11.1% as investors’ risk appetite continued to shift.
Local deposit money banks and other asset managers unpacked naira assets in the bond market as inflation continues to eclipse returns on portfolios. Speaking with MarketForces Africa about expectations, some Broadstreet analysts maintained that money will continue to go to where it is treated well.
“With year-to-date return running near 40% in the equities market, there must be some kind of incentives to see buying interest in the fixed interest securities assets – apart from a push by government regulation demand”, LSintelligence Associates said.
In the money market, pressures on liquidity extended further to midweek, pushing short-term benchmark interest rates higher.
Data from the FMDQ platform showed that the overnight lending rate expanded by 67 basis points to 17.1% on Wednesday due to significant funding pressure on the system.
Across the curve, traders at Cordros Capital told investors in a note that the average yield advanced at the short (+30bps) and mid (+50bps) segments.
The yield shift came following profit-taking in the 22-day to maturity (+151bps) and 127-day to maturity (+301bps) bills, respectively. Conversely, the average yield contracted at the long (-1bp) end as participants demanded the 330-day to maturity (-1bp) bill.
Elsewhere, the average yield stayed flat at 12.0% in the OMO segment, following the apex bank OMO auction in the week. Sell pressures also persisted in the FGN bond market, causing the average yield to advance by 5bps to 15.4%.
Across the benchmark curve, the average yield expanded at the short (+15bps) and long (+2bps) ends as investors sold off the MAR-2025 (+46bps) and APR-2049 (+36bps) bonds, respectively. Meanwhile, the average yield closed flat at the mid-segment.