Yield on Nigerian Treasury Bills Swings Upward to 3.5%

Yield on Nigerian Treasury Bills Swings Upward to 3.5%

Today, average yield on Nigerian Treasury Bills swings upward to 3.5% following the bearish sentiment that pervaded trading sessions despite pockets of demand in the market.

Amidst the decision of the monetary policy committee of the Central Bank of Nigeria to hold key rates, sell-offs pushed average yields on treasury-bill instrument up by 8 basis points.

In the money market, the financial system liquidity improved slightly to N133 billion, from N107 billion yesterday. The increase was supported by N43 billion open market operations (OMO) repayment that hit the system.

This drove a slight moderation in funding rates, even as rates remained in the double digits level. Precisely, the Open Buy Back (OBB) and Overnight (O/N) rates declined by 300 basis points (bps) and 275bps to 11.50% and 12.00%, respectively.

“We expect funding pressures to continue due to the absence of any major inflow”, Chapel Hill Denham said. In the bond market, yields rose slightly by an average of 1bp across the benchmark curve to 10.16%.

This was mostly driven by upward repricing at the long (+2bps to 11.36%) end of the curve. In its second policy meeting of the year, the MPC has elected to retain all policy parameters.

Precisely, the MPR was unchanged at 11.5%, with asymmetry static at +100/-700bps. Also, the cash reserve ratio (CRR) and liquidity ratio were similarly maintained at 27.5% and 30.0%, respectively.

“With inflationary pressures likely to remain elevated over the near term, amid large fiscal and external sector imbalances, we expect to see a further repricing of yields in the short to medium term”, Chapel Hill Denham said.

Analysts think decision will at least slow the pace of the bond market selloff and provide a relatively benign environment for government borrowing.

Greenwich Merchant Bank analysts however said they do not envisage any major impact across the financial market due to MPC decision.

In the currency market, the Naira gained ground marginally against the US dollar by 0.08% to 409.80 in the Investors & Exporters window. However, the currency closed flat in the parallel market at 486.00 against the US dollar.

Meanwhile, the foreign exchange rate remained unchanged in the official and Secondary Market Intervention Sale (SMIS) segments at 379.00 and 380.69 respectively. Ahead of the Primary Market Auction (PMA) tomorrow, bond market investors were slightly bullish on the short end.

The Debt Management Office (DMO) will be reopening up to NGN150.0 billion across the FGN MAR 2027, FGN MAR 2035, and FGN JUL 2045 instruments.

Short-term Rates on Fixed Income Securities Up as Bond Yields Compress

“We expect marginal rates to firm up as investors seek higher returns”, Greenwich Merchant Bank stated in a commentary. Yield on Nigerian Treasury Bills Swings Upward to 3.5%

Stock Market Reacts Negative

Stock market reacts negative with sell-offs as monetary authority holds key policy rates after two days demanding deliberations. Profit-takings activities in the market knocked off N9.4 billion from stock market capitalisation, thus widened year to date losses.

As noted, price declines in ZENITH (-2.2%), ETI (-5.9%) and FLOURMILL (-2.4%) dragged performance in the market. Consequently, the benchmark index declined 5 basis points to 38,704.97 points, as year to date loss worsened to -3.9%.

Following the loss recorded, market capitalisation settled at ₦20.3 trillion. Trading activity improved as volume and value increased 48.0% and 96.0% respectively to 410.4 million units and ₦6.0 billion.

The most traded stocks by volume were DANGSUGAR (107.1 million units), UBN (78.5 million units) and TRANSCORP (31.6 million units).

Meanwhile DANGSUGAR (₦1.8 billion), GUARANTY (₦832.3 million) and STANBIC (₦499.8 million) led by value. In its market report, Afrinvest stated that performance across sectors under its coverage universe was bullish as 4 indicators gained.

The Insurance index led the gainers, up 0.6% following price uptick in WAPIC (+10.0%) and MANSARD (+1.0%).

Also, the Oil & Gas and Consumer Goods indices appreciated 0.3% and 0.1% respectively on the back of gains in OANDO (+1.6%) and NIGERIAN BREWERIES (+2.1%).

Afrinvest hinted however that buying interest in MTNN (+0.1%) drove a 6 basis points gain in the AFR-ICT index. On the flip side, sell-offs in ZENITH (-2.2%) and ETI (-5.9%) pushed the Banking index lower by 0.7% while the Industrial Goods index closed flat.

Investor sentiment, as measured by market breadth weakened to 1.0x from the 3.3x recorded previously as 19 stocks gained against 20 decliners.

WAPIC (+10.0%), CAP (+10.0%) and NPFMCRFBK (+9.9%) were the top gainers while LIVESTOCK (-9.5%), CHAMS (-8.7%) and CORNERST (-6.7%) were the top decliners.

“We expect a mix of bargain-hunting and profit-taking in the local bourse in subsequent trading sessions”, Afrinvest stated.

Yield on Nigerian Treasury Bills Swings Upward to 3.5%