Yield Falls to 17.77% Ahead of N220bn Treasury Bills Auction
The average yield on Nigerian Treasury bills fell slightly to 17.77% in the secondary market ahead of midweek auction scheduled by the authority. Trading activity was relatively quiet as investors focus attentions on midweek auction where the Central Bank of Nigeria (CBN) planned to issue N220 billion worth of Treasury bills across standard tenors.
Spot rates are also expected to shift as the authority continue to send signals about potential monetary easing taking place in the latter part of the year. Disinflation, exchange rate stability and anticipated economic growth trajectory are causing shift in spot rates pricing in the fixed income market already.
Nigerian government is cutting back on borrowing costs as reforms begin to yield results, tightening bonds supply and slashing spot rates on Treasury papers. The soft trading pattern was also caused by CBN’s OMO bills auction where ₦600 billion was offered across the 105-day and 245-day maturities.
Across the curve, the average yield contracted at the short (-1bp), mid (-1bp) and long (-1bp) segments, Cordros Capital Limited said in its report. Analysts noted that the yield marginal contraction was driven by the demand for Nigerian Treasury bills with maturing in 80 days (-1bp), 171 days (-1bp), and 353 days (-1bp) bills, respectively.
Conversely, the average yield expanded by 6bps to 24.7% in the OMO bills segment due to sell pressures that occurred on the curve amidst N600 billion auction floated by the authority. Given the ample liquidity in the market, the CBN conducted an OMO auction, offering N600.0 billion across the 105-day and 245-day tenors.
Demand was heavily concentrated in the 245-day tenor, which attracted subscriptions worth N2.12 trillion. Ultimately, the entire offer was allotted on the 245-day bill, clearing at 23.70%.
Last Week
The secondary market for Treasury Bills traded with a bearish tone, as the average yields across the curve rose by 11bps to 21.37%. However, the yields across the Nigerian Treasury Bills (NTB) and Open Market Operations (OMO) segments, advanced by 7bps and 3bps to close at 17.77% and 24.73% respectively.
Analysts noted selling pressure was concentrated at the mid and long tenor maturities, with the 22-Jan bill recording a yield expansion of 79bps. Meanwhile, in the OMO segment, the modest 3bps rise in average yield was largely driven by the 19-Aug bill (+173bps), which appears to be pulling to par as it approaches maturity #Yield Falls to 17.77% Ahead of N220bn Treasury Bills Auction FirstHoldCo: Strong Top-Line Growth, But Profitability Tells a Cautionary Tale
