Yield Crashed to 6.6% as Nigerian Treasury Bills Rally

Yield Crashed to 6.6% as Nigerian Treasury Bills Rally

The average yield on Nigerian Treasury bills crashed further on Tuesday as the equities market maintain popularity amidst negative real return on naira assets in the fixed income space.

At the primary market auction conducted by the Central Bank of Nigeria (CBN), spot rates across tenor instruments declined despite rising interest and inflation rates. The spot rates’ downward pricing was supported by improved liquidity in the market.

At the last primary market auction conducted on Wednesday, the apex bank offered and allotted N180.4 billion worth of Nigerian Treasury bills to market participants.

Auction results showed that stop rates changed across the three tenors. The CBN sold 91-day for 2.29% from 4.50%, 182-day for 4.99% from 6.44%, and 364-day for 7.99% from 8.99%.

Today, market traders reported that financial system liquidity declined by 17.7% to close at ₦229.11 billion. On Friday, market liquidity was reported at N278.4 billion, boosted by inflow from FAAC and an NTB maturity

Despite the decrease, interbank funding rates were unmoved at 12.75% and 13.25% levels. The market expects N20 billion inflow from OMO maturities to support liquidity levels.

In its market brief, Coronation Research said it expects rates in the money market to trend upwards as the projected outflow from a potential CRR debit by the CBN would likely outweigh the expected inflow from an OMO maturity and FX refund

In the secondary market, trading activities on Treasury bills ended on a bullish note. the average yield contracted by 20 basis points to 6.6%, Cordros Capital said in a note to investors.

Fixed income traders and analysts said across the curve, the average yield closed flat at the short and mid segments but declined at the long (-33bps) end, following demand for the 303-day to maturity (-100bps) bill.

Notably, the Mar-24 and Apr-24 papers attracted the most traction as yields dipped by 68 and 18 basis points, respectively, TrustBanc Capital told investors in a market brief.>>Naira Steadies as Banks Issue Update on FX Purchase

As money market stress eased, Cowry Asset Management Limited briefed investors that banks with liquidity demanded lower rates on Tuesday. Meanwhile, local banks’ activities at the CBN standing lending facility have been reduced strongly.

Analysts saw short-term benchmark rates, such as the open repo rate and the overnight lending rate, remained unchanged at 12.75% and 13.25%, respectively. #Yield Crashed to 6.6% as Nigerian Treasury Bills Rally

Airtel Africa Falls to N4.4trn on Price Correction