Yield Shrinks After Spot Rate on 364-Day Treasury Bills Falls
The average yield on Nigerian Treasury bills shrinks in the secondary market on Thursday after a 49 basis points drop in 364-day bills spot rate at the Central Bank (CBN) primary market auction on Wednesday.
At the primary market auction conducted by the apex bank, the subscription level was robust, according to some analysts’ prediction and this resulted in a decline in spot rate on long-dated T-Bills, from 6.99% to 6.50%.
Healthy liquidity in the financial system has continued to impact both short term rates and fixed income yields as funds continue to seek better return, though low catalyst has remained a pressure cooker.
Today, money market data shows that the average interbank rate climbed by 8 basis points to 1.84% following a 17 basis points expansion in the Open Buy Back to close at 1.67% while the Overnight rate remained flat to close 2.00%.
Alpha Morgan Capital said in a market report today that activities at the Nigerian treasury bills secondary market traded on mixed sentiments. Average yields across medium-term and long-term maturities declined by 5 bps and 17 bps, respectively. However, the average yield across the short-term maturities expanded by 5 bps.
Consequently, analysts at FSDH Capital spotted that the average yield dropped by 10 basis points to close at 5.12% from 5.22 per cent on the previous day. Yields on 13 days to maturity bills compressed with the 25-Aug-22 maturity bill recording the highest yield decrease of 33 basis points, according to FSDH Capital.
The CBN held its scheduled Primary Market Auction mid-week, selling Nigerian Treasury Bills worth ₦196.17 billion across the 91-day (₦4.12 billion), 182-day (₦2.99 billion), and 364-day (₦189.06 billion) tenors.
The stop rates for the 91-day and 182-day tenor remained unchanged at 2.50 per cent and 3.50 per cent, respectively.
However, the stop rate for the 364-day tenor cleared lower at 6.50 per cent (-49 bps). The auction was oversubscribed by 281 per cent, with bid-to-cover ratios settling at 1.01x (91-day), 0.48x (182-day), and 4.10x (364-day).
In the CBN Open Market Operations, FSDH Capital hinted the average yield across the curve decreased by 4 basis points to close at 5.96 per cent as against the last close of 6.00 per cent.
Average yield across the short-term maturities compressed by 21 basis points, analysts added. However, it was noted that the average yields across medium-term and long-term OMO bills maturities increased by 22 and 3 basis points, respectively.
FSDH Capital said yields on 7 days to maturity bills declined with the 23-Nov-21 maturity bill recording the highest yield decrease of 59 basis points, while yields on 8 days to maturity bills advanced with the 22-Feb-22 maturity bill recording the highest yield increase of 27 basis points.
Activities in FGN bonds secondary market traded on mixed sentiment as the average bond yield across the curve cleared lower by 5 basis points to close at 8.31 per cent from 8.36 per cent on the previous day.
Average yields across short tenor and medium tenor of the curve decreased by 5 basis points each. However, the average yield across the long tenor of the curve increased by 2 basis points, analysts’ notes show.
The 23-MAR-2025 maturity bond was the best performer with a decrease in the yield of 94 basis points, while the FGNSB 13-NOV-2021 bond was the worst performer with an increase in yield of 14 basis points, FSDH Capital said.
The Debt Management Office (DMO) plans FGN bonds Primary Market Auction for next week. DMO will offer FGN bond worth ₦150 billion through re-opening of 10-year (₦50 billion), 20-year (₦50 billion), and 30-year (₦50 billion) tenors. # Yield Shrinks after Spot Rate on 364-Day Treasury Bills Falls
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