Treasury Bills Yield Slides 2bps Ahead of Inflation
The average yield on Nigerian Treasury bills slid by 2 basis points (bps) to 13.35% ahead of inflation figure for the month of October 2023 set to be released by the statistics office.
According to National Bureau of Statistics data, the headline inflation rate accelerated to 26.72% in September, and analysts are projecting that the consumer price index would worsen further on account of subsidy removal and devaluation of the local currency in the second half of the year.
Fixed interest securities investors’ portfolio returns have been eclipsed by surging inflation conditions, widening negative real return on investment across asset classes.
On Monday, risk sentiment improved moderately amidst a lack of investment options. The Treasury bill market recorded some buying interest across the tenor instruments traded in the secondary market space.
Investors are still filing lost bids at the Central Bank of Nigeria (CBN) primary market auction where the apex bank priced spot rates on 91-day, 181-day and 364-day bills higher.
Due to increased demand, the Nigerian Interbank Treasury Bill’s True Yield moderated on Monday for maturity of the tenor buckets tracked.
Market analysts reported that the average secondary market yield on Nigerian Treasury Bills was bullish, slightly decreasing by 2bps to 13.35%.
Elsewhere, the secondary market for FGN Bonds remained quiet on Monday as the average yield across the short, mid and long of the curve stayed muted at 15.67% from the prior close.
In the money market, liquidity pressures persisted after funding pressure was witnessed in the financial system in the past week.
As a result, short-term benchmark rates rose further. Data from FMQQ showed that Key money market rates, including the open repo rate (OPR) and the overnight lending rate (OVN), increased by 0.34% and 0.32% to 16.92% and 17.90% respectively.