Yield on Long-Term Treasury Bills Rises 99 Basis Points
The average yield on Treasury Bills with long-term maturities rises 99 basis points Thursday amidst weak trading activities in the fixed income market where investors earn negative real returns.
The fixed income market remains unimpressive for investors struggling to cover naira asset exposure to headline inflation, Nigerian government access fund in the space at a rate below the nation’s average inflation rate in the country.
And now, issuance has been slowed down compared with the first half of the year when the Nigerian government raised about N2 trillion from Treasury bills instruments. With funds seeking where to play, and low issuance, subscription levels at primary market auction have been heavy, thus, the spot rate on the 364-day treasury bills has declined persistently.
In the money market, the financial system liquidity position remains strong as short term rates see downward adjustments. The average interbank rate declines further, according to data tracked from FMDQ Exchange.
Today, the overnight lending rate decreased by 25 basis points to close at 15.50 per cent as against the last close of 15.75 per cent. Also, the Open Buy Back (OBB) rate dropped off 50 basis points to close at 15.00 per cent compared to 15.50 per cent on the previous day.
At the investors and exporters foreign exchange market, Naira appreciated by 0.06 per cent as the dollar was quoted at ₦414.80 as against the last close of ₦415.07. Most participants maintained bids between ₦404.00 and ₦457.02 per dollar, according to FSDH Capital note.
In the T-Bills secondary market, trading activities closed with average yield across the curve increasing by 37 basis points to close at 4.51 per cent from 4.14 per cent on the previous day.
Average yield across the long-term maturities expanded by 95 basis points, while the average yield across the medium-term maturities compressed by 55 basis points, according to FSDH note.
However, analysts spotted that the average yield across the short-term maturities remained unchanged at 3.52 per cent.
FSDH Capital hinted in the note that yields on 4 days to maturity bills advanced with the 24-Nov-22 maturity bill recording the highest yield increase of 565 basis points, while yields on 9 days to maturity bills remained unchanged.
In the OMO bills market, the average yield across the curve closed flat at 5.50 per cent, according to various analysts report seen by MarketForces Africa.
Average yields across short-term, medium-term, and long-term maturities remained unchanged at 5.37 per cent, 5.54 per cent, and 6.14 per cent, respectively.
FGN bonds secondary market closed bullish as the average bond yield across the curve cleared lower by 7 basis points to close at 7.93 per cent from 8.00 per cent on the previous day.
Average yield across the short tenor of the curve decreased by 9 basis points, However, the average yields across medium tenor and long tenor of the curve remained unchanged.
The FGNSB 11-DEC-2022 bond was the best performer with a decrease in the yield of 36 basis points, while the FGNSB 12-FEB-2022 bond was the worst performer with an increase in yield of 2 basis points.
In the absence of any trigger, the secondary bond market is likely to remain subdued in the short term, FSDH Capital projected. # Yield on Long-Term Treasury Bills Rises 99 Basis Points