Treasury Bills Yield Up 16 Basis Points as Naira Depreciates
Nigerian Treasury bills traded in the secondary market ended on a bearish note as average yield expanded by 16 basis points to 5.0 per cent, according to Cordros Capital market report as Nigerian local currency, Naira depreciates to N412 to a dollar at Investors and exporters window.
Following a depressing outturn in the fixed income market in recent times, the average yield on Nigerian Treasury bills started gathering moment after an uptrend on Tuesday and remained in a positive trajectory despite a low issuance outlook in the second half of the year.
Data from FMDQ shows that the overnight lending rate contracted by 242 basis points to 13.3 per cent in the absence of any significant funding pressure on the system.
Sufficiently okay financial system liquidity had driven interbank rates downward amidst inflow from maturing bills, easing pressure on short-term borrowings.
Open buy back lowered 250 basis points to 13 per cent while Nigerian local currency depreciated 0.2 per cent to N412 in the Investors and Exporters foreign exchange window as the Central Bank warns of sharp practices in dollar sales in banks.
In the parallel market, Naira was steady amidst expectation of about $10 billion from Eurobond and if Nigeria exercises the right to access about $3.5 billion from IMF special drawing rights.
Also, across the benchmark curve, the average yield on Treasury instruments contracted at the short (-18bps) end due to demand for the 92-day to maturity (-129bps) bill.
Conversely, the average yield expanded at the mid (+47bps) and long (+27bps) segments due to selloffs of the 197-day to maturity (+64bps) and 246- day to maturity (+83bps) bills, respectively.
Similarly, analysts noted that the average yield at the open market operations (OMO) segment expanded by 5 basis points to 6.0 per cent.
Federal Government bond secondary market was also bullish, the average yield in the space contracted by 5 basis points to 11.0 per cent, according to Cordros capital report
But analysts noted that the average yield was flattish at the short end but declined at the mid (-6bps) and long (-7bps) segments due to demand for the FEB-2028 (-9bps) and JUL-2045 (-13bps) bonds, respectively across the benchmark curve.
