Treasury Yield Ends Flat as CBN Plans to Roll Over Maturing Bills
The average yield on Nigerian treasury bills settles at 4.49% on Monday as Central Bank (CBN) plans to roll over maturing bills worth N5.9 billion at primary market auction on Wednesday.
The Treasury bills market has shed some pips in the latter part of the year due to declining spot rates in the primary market auctions conducted by the Central Bank.
Some analysts attribute the slowdown on spot rates at the mid and end of the curve to solid demand by investors at past auctions.
With robust financial system liquidity and low-interest rate environment, analysts see yields on fixed income market subdued for the rest of the year.
In the money market, the interbank rate sloped downward on Monday as both open buy back (OBB) and overnight lending rates dropped off some basis points.
Data tracked from the FDMQ Exchange shows that the Overnight rate decreased by 375 basis points to close at 14.00 per cent as against the last close of 17.75 per cent.
Also, Open Repo (OPR) rate decreased by 400 basis points to close at 13.50 per cent compared to 17.50 per cent on the previous day.
Analysts at Cordros Capital Limited attribute the slowdown in the short term rates to the absence of significant funding pressure in the financial system today.
Money market rates are expected to slow down further as an Additional ₦40 billion worth of Open Market Operation bills are also set to hit the system during the week, boosting financial system liquidity which closed at ₦143.1 billion long on Friday.
At the Investors and Exporters FX market, Naira appreciated by 0.25 per cent as the dollar was quoted at ₦414.06 as against the last close of ₦415.10. Most participants at the window maintained bids between ₦404.00 and ₦452.15 per dollar, according to FSDH Capital.
Today, Nigeria T-Bills secondary market closed on a flat note with the average yield across the curve remaining unchanged at 4.49 per cent. Analysts at FSDH Capital noted that average yields across short-term, medium-term, and long-term maturities closed flat at 3.52 per cent, 3.74 per cent, and 5.18 per cent, respectively.
In the OMO bills market, the average yield across the curve closed flat at 5.48 per cent. Average yields across short-term, medium-term, and long-term maturities remained unchanged at 5.47 per cent, 5.51 per cent, and 5.54 per cent, respectively.
FGN bonds secondary market closed on a mildly positive as the average bond yield across the curve cleared lower by 1 basis point to close at 8.15 per cent from 8.16 per cent on the previous day.
Average yields across short tenor and long tenor of the curve decreased by 1 basis point each, analysts note show. However, the average yield across the medium tenor of the curve remained unchanged.
The FGNSB 14-MAY-2023 bond was the best performer with a decrease in the yield of 5 basis points, while the FGNSB 11-MAR-2022 bond was the worst performer with an increase in yield of 4 basis points.
FSDH Capital maintains that the secondary bond market is likely to remain subdued in the short term.
Afrinvest anticipates a quiet secondary market as participants’ position for another auction scheduled for 15-Dec-21 with the Central Bank rolling over maturing NT-Bills of approximately ₦5.9 billion.
Read Also: Yields Drop as DMO Roll over 87% of Maturing Bills
