Yield on Nigerian Treasury Bills Decreased to 17.7%
The average yield on Nigerian Treasury bills declined 91 basis points to close at 17.71% due to selloffs in the secondary market, according to traders’ notes. The yield trended downward ahead of the Central Bank of Nigeria’s (CBN) primary market auction on Wednesday.
The apex bank is expected to roll over N161.33 billion worth of maturities. Tracking inflation rate acceleration, the yield on short-term borrowing instruments remains elevated as the market expects interest rate hikes to trigger further yield repricing.
The fixed interest securities market registered buying momentum last week ahead of the monetary policy committee meeting. Broadstreet analysts are expecting interest rate adjustment as the Central Bank of Nigeria committee signals intention to anchor headline inflation.
According to traders at Cordros Capital Limited, players seeking to sterilise their excess cash made significant purchases at the mid and long segments of the curve as a result of the bullish sentiments.
The market’s average yield then decreased by 74 basis points to 17.9%. Analysts said across the market segments, the average yield declined by 91 basis points to 17.7% in the Treasury bills secondary market and dipped by 29 basis points to 18.5% in the OMO bill segment in the secondary market.
Fixed income market analysts envisage sustained downward movement of yield in the T-bills secondary market, saying liquidity surplus in the financial system would drive more interest in bills. In the money market, the Nigerian Interbank Offered Rate experienced a widespread decrease across all maturities, signalling an increase in liquidity within the system. As a result, short-term benchmark interest rates declined sharply.
Important money market rates, such as the open repo rate and overnight lending rate, plummeted to 26.22% and 27.29%, respectively, on Friday, according to inflation data gathered from the FMDQ Securities Exchange.
Funding rates had crossed 30% due to pressures on system liquidity following high ticket size Treasury bills sales in February by the monetary authority. In February a total of N1.265 trillion was offered in 2 Treasury bills auctions. The auction was driven by the need to reduce money supply and mop up excess liquidity to control current and anticipated inflation as well as stabilize the Naira.
Hence, the stop rate on the 91-day, 182-day, and 364-day instruments went up from 3.72%, 5.685%, and 9.96% to close at 17%, 17.5%, and 19%, respectively. In February, the federal government issued fresh 7-year and 10-year bonds, offering a total of N2.5 trillion at a stop rate of 18.5% and 19%, respectively. #Yield on Nigerian Treasury Bills Decreased to 17.7% Oil Hits $86 Over Improved Demand Outlook
