Treasury Bills Yield Rises as Naira Sinks Further

Treasury Bills Yield Rises as Naira Sinks Further

The average yield on Nigerian Treasury Bills (NTB) tracks higher by 32 basis points on Monday due to selloffs on the debt securities while pressures on Naira worsen in the foreign exchange market. READ: FGN Bond Yield Hits 10.9% as Naira Sinks

In the money market, short terms rates slow down as a result of relatively better liquidity in the financial system. This triggered eight basis points drop down in the average interbank rate which close at 13.92%.

According to data from FMDQ Exchange, the Open Buy Back rate declined by seventeen basis points to 13.83% while the overnight lending rate remained flat at 14.00%. Some analysts predict that healthy liquidity would keep short-term rates lower this week.

Today, trading activities at the secondary market for Nigerian Treasury bills ended on a bearish note following selling interests on Aug 2022 NTB, Apr 2023 NTB, and June 2023 OMO papers at 4.50%, 5.60%, and 6.20%, Alpha Morgan Capital said in a market report.

Consequently, the average rate climbed by 32 basis points to close at 5.57%.

Across the curve, Cordros Capital said the average yield expanded at the short (+82bps), mid (+22bps), and long (+8bps) segments due to profit-taking on the 66-day to maturity (+277bps), 143-day to maturity (+64bps), and 339-day to maturity (+73bps) bills, respectively.

In the open market operation (OMO Bills) segment, the average yield expanded by 34 basis points to 5.6%.  Meanwhile, activities at the FGN bond secondary traded somewhat bearish too with selling interests seen on 2025s, 2026s, and 2032s maturities.

The trading pattern witnessed in the secondary market saw the average yield climb by three basis points to close at 11.21%. Across the benchmark curve, traders explained that the average yield expanded at the short (+10bps), mid (+3bps), and long (+1bp) segments as investors sold off the APR-2023 (+53bps), FEB-2028 (+6bps), and JUL-2034 (+3bps) bonds, respectively.

Elsewhere, trading activities on FGN Eurobond space were somewhat bullish following the continuous resurgence of investors’ interests as they positioned ahead of a busy week of data releases, according to Alpha Morgan Capital.

Traders attribute this to buying interests witnessed along the sovereign curve except for the Sep-2051 instrument that saw some sell-side pressure. In sum, the average yield was down by 4bps to close at 12.82%.

Pressures on market demand persist on Monday in the Investors and Exporters foreign exchange (FX) window as the naira depreciated by 0.18% against the U.S. Dollar to N425.75 from N425 on Friday closed.  # Treasury Bills Yield Rises as Naira Sinks Further