Yield on Nigerian Treasury Bills Falls ahead of Rebase Data
The average yield on Nigerian government Treasury bills fell by nine basis points in the secondary market. Buying interest was prevalent across the curve, with players cherry-picking on selected instruments like the 10-Apr, 11-Dec, and 22-Jan bills.
The yield shrank as investors continue to show interest in naira asset amidst expectation that statistics office inflation figure for January will be adjusted with 2024 as base year.
Traders said fixed income market players took advantage of attractive yields across the curve. Yields continued to moderate, with short- and long-dated maturities leading the decline.
Matching offers also emerged from market players despite ongoing liquidity challenges. A substantial volume of trades was executed, primarily focusing on the 22 Jan 26 and 5 Feb 26 maturities.
Lower inflation figure would mean that the Central Bank of Nigeria (CBN) would temper hawkish position to drive economic growth.
“If the CBN eventually cut benchmark interest rate, the fixed income market assets will also be repriced – spot rates would started dropping to reflect new market dynamics’, analysts explained.
Ahead of inflation, there have been sustained demand for money market instrument. With more demand for Treasury bills on Tuesday, the average yield contracted by 8bps to 22.4%. Across the curve, the average yield contracted at the short (-14bps), mid (-1bp) and long (-9bps) segments, Cordros Capital Limited said in a note.
Analysts said the yield contraction was driven by the demand for the 58-day to maturity (-88bps), 177-day to maturity (-1bp) and 303-day to maturity (-52bps) bills, respectively. Similarly, the average yield declined by 20bps to 26.8% in the OMO segment as demand for naira assets continue to rise.
“We expect prevailing market conditions to persist, albeit at a moderate pace, as participants adjust to prevailing liquidity levels”, TrustBanc Financial Group Limited said. #Yield on Nigerian Treasury Bills Falls ahead of Rebase Data Remita Debit Widens Liquidity Deficit in Banking System
