Yield on Treasury Bill Moderated as DMO Plans to Raise ₦450 billion
Patience Oniha - Director General, Debt Management Office

Yield on Treasury Bill Moderated as DMO Plans to Raise ₦450 billion

Yield on Nigerian Treasury bill moderated a basis point on Thursday to 0.47% as Debt Management Office, DMO announced plan to raise between ₦360 billion to ₦450 billion in the first quarter (Q1) of 2021.

In the money market, the financial system liquidity sustained its robust outturn, opening the trading day at ₦557.87 billion from ₦446.76 billion in the prior session.

Chapel Hill Denham said in a note that the buoyant liquidity stemmed largely from ₦232.36 billion Open Market Operations (OMO) maturity, which outweighed OMO sales of ₦107.22 billion.

It added that the positive impact of the preceding drove a sharp moderation in the interbank funding rates.

The Open Buy Back (OBB) and the Overnight (OVN) rates moderated by 75 basis points (bps) apiece to 0.75% and 1.25%, respectively.

The firm’s analysts indicate that they are expect funding pressures to remain benign in the near term.

Meanwhile, sentiments were broadly mixed in the fixed income market but with a bullish tilt.

Chapel Hill Denham in market report hinted that at the front end of the curve, T-Bill benchmark yield curve dipped marginally to close at 0.47%.

However, OMO benchmark curve rose slightly by an average of 1bp to 0.92%.

Elsewhere in the bond market, the benchmark bond yield curve declined by 2bps to 6.81% on average.

Most of the drivers stemmed from the short end, which moderated by 11bps to 3.82% on average.

Meanwhile, analysts explained that this preceding completely masked the bearish performance in the mid (+1bp to 7.42%) end of the curve.

The long-end of the curve closed flat at 8.36%.

Bond auction calendar for Q1-2021 indicates that DMO looking to raise N360 billion to N450 billion.

Analysts however noted that the upper band of the issuance range is significantly higher than N220 billion planned in Q4-2020.

The DMO will be reopening three bonds – MAR 2027, MAR 2035, and JUL 2045.

In the currency market, Naira depreciated against the United States dollar at the Investors & Exporters Window by 0.34% or ₦1.34 kobo to ₦394.67.

Similarly, the local currency lost grounds against the greenback in the parallel market by 0.21% or ₦1.00 to ₦475.00.

Read Also: Fixed Income Investors Trade Lowly Ahead of Auction, MPC Meeting

Yield on Treasury Bill Moderated as DMO Plans to Raise ₦450 billion