Yield on Nigerian TBills Slides to 16.05% -MarketNews
The average yield on Nigerian Treasury bills declined marginally as the market reacted to an interest rate hike by the Central Bank of Nigeria (CBN). The decision to increase the benchmark interest rate provoked buying interest in the secondary despite tightened liquidity levels.
Consequently, the overnight lending rate expanded by 246 basis points to 26.7%, in the absence of any significant inflows into the system. Banks were noted to be scrambling for a liquidity boost, the same development witnessed last week in the market.
Meanwhile, analysts are predicting that yield will remain elevated amidst a high-interest rate environment. Investors are expecting further yield repricing to cover inflation exposures and reduce negative interest yield on assets.
Traders explained that the market experienced mixed sentiments, albeit with a bullish bias, as the average yield pared by a basis point to close at 16.6%. In its market update, Cordros Capital Limited told investors that across the curve, the average yield was unchanged at the short end but contracted at the mid (-1bp) and long (-1bp) segments,.
The yield swung following mild interest in the 177-day to maturity (-1bp) and 345-day to maturity (-1bp) bills, respectively. Elsewhere, the average yield expanded slightly by 1bp to 18.1% in the OMO bill segment in the secondary market.
In the money market, a broad-based upward trend in rates was observed following a decision to hike the monetary policy rate on Tuesday. The overnight interbank borrowing rate saw a significant 19 basis points increase, reaching 25.13%, reacting to the recent interest rate hike by the CBN to 22.75%, Cowry Asset Limited said in an update.
Analysts added that this tightening of system liquidity led to heightened demand for funding among banks at the same time. Then, key money market rates, including the open repo rate (OPR) and overnight lending rate (OVN), concluded at 25.46% and 26.71%, respectively. #Yield on Nigerian TBills Slides to 16.05% -MarketNews
>>> CBN Clears $400m FX Backlog, Claims Naira Grossly Undervalue
