Treasury, Bonds Yields Flatten as Naira Gains

Treasury, Bonds Yields Flatten as Naira Gains

In the secondary market, the average yield on Nigerian Treasury Bills closed flattish on Tuesday due to a thin trading session, according to traders; a similar trend was spotted in the secondary market for Federal Government (FGN) Bonds.

Yesterday, Debt Management Office (DMO) holds a primary market auction for FGN Bonds which was greeted by a higher subscription level as investors scramble for investment options in the financial markets.

In the foreign exchange market, the Nigerian naira recorded a moderate gain amidst demand pressures. Settling at N420.28 per a United States dollar, the local currency gains 0.3% at the Investors and Exporters FX window. 

Also, short-term rates were relatively unchanged in the money market on Tuesday due to steady liquidity in the financial system, according to data from FMDQ Exchange. READ: Fixed Income Market Sees Flattish Yields as Naira Steadies

The overnight lending rate stayed flat at 14.0%, a level Cordros Capital traders attributed to the absence of any significant funding pressures. Traders’ note shows that trading activities in the Treasury bills secondary market were mixed as the average yield was unchanged at 4.6%. Yields had adjusted upward after 150 basis points interest rate hike.

However, across the curve, the average yield expanded at the short (+11bps) and mid (+27bps) segments as participants sold off the 100-day to maturity (+46bps) and 114-day to maturity (+77bps) bills, respectively.

But traders’ note shows that yield contracted at the long (-23bps) end due to demand for the 310-day to maturity (-89bps) bill.  Elsewhere, the average yield expanded by 45 basis points to 5.1% in the open market operations (OMO Bills) segment.

Bond buyers traded mixed in the secondary market on Tuesday, albeit with a bullish tilt as the average yield pared by a basis point to 11.1%. The yield curve retains its position relatively after the DMO auction on Monday.

Across the benchmark curve, Cordros Capital said the average yield contracted at the mid (-1bp) and long (-3bps) segments as investors demanded the FEB-2028 (-3bps) and APR-2037 (-14bps) bonds, respectively. The average yield was flat at the short end, according to fixed income analysts’ notes reviewed by MarketForces Africa.  #Treasury, Bonds Yields Flatten as Naira Gains