Yield Dips as Investors Bets on Nigerian Treasury Bills
The average yield on Nigerian Treasury bills declined in the secondary market ahead of the inflation report for the month of June, which is scheduled to be released. The market expects the inflation rate to slow down in the month due to base effects.
Investors and authorised dealers increased buying interest in the fixed income market following the apex bank auction on Wednesday. The latest Treasury bills market was spurred by investors seeking to fill lost bids at the primary market auction amidst yield repricing expectations.
The liquidity level in the financial market remained tight, but the short-term benchmark interest rates declined, according to data from the FMDQ platform.
Opening system liquidity stayed short as banks maintained a borrowing spree at the Central Bank of Nigeria’s (CBN) standing lending facility for funding. However, the open repo rate eased by 35 bps to 31.75%, while the overnight rate decreased by 16 bps to 32.60%.
The average yield declined in the short (-59 bps), mid (-1 bps), and long (-2 bps) segments due to demand for the 63-day to maturity, this caused the short-dated instrument’s yield to dip by -346 bps. Also, the market experienced buying interest at the belly of the curve, demand for 147-day to maturity caused the associated yield to decline by -2 bps.
At the long end, there was demand for 350-day to maturity while its associated yield dropped by -2 bps. Similarly, the average yield dipped by 2 basis points to 24.3% in the OMO segment in the secondary market. #Yield Dips as Investors Increase Bets on Nigerian Treasury Bills
