Yield Shrinks as Investors Go After New Treasury Bills
The average yield on Nigerian Treasury bills shrank by 57 basis points to 22.60%, two investment firms told investors in a note. The yield declined as investors who lost their bids went after the Treasury bills auction issued at the primary market on Wednesday.
Market participants showed interest in the newly issued one-year bills amidst its lower spot rate pricing at the auction. Generally, fixed income market analysts said the heightened investor demand has continued to drag the yield curve low amidst negative real returns in the debt market.
With the inflation rate at 34.80%, analysts believe that the monetary policy authority’s inflation fight would trigger an interest rate hike at the February meeting.
Some experts expressed concerns that the local economy has been tightened enough and is now considered not strong enough to accommodate another interest rate hike, though the inflation projection remains uptrend.
The Treasury bills rally, which was driven by post-auction activity, is anticipated to ease due to tight liquidity conditions in the money market. “While some investors capitalised on the rally to take profits, moderate demand emerged for Jan bills, with buyers selectively positioning at attractive levels,” CardinalStone Limited told investors in a note.
Across the curve, the average yield contracted at the short (-1 bp), mid (-63 bps), and long (-83 bps) segments, Cordros Capital Limited reports. Analysts said the yield contraction was driven by the demand for the 14-day to maturity (-2bps), 105-day to maturity (-173bps), and 301-day to maturity (-211bps) bills, respectively.
Similarly, the average yield declined by 22 bps to 27.1% in the OMO bills segment in the secondary market. #Yield Shrinks as Investors Go After New Treasury Bills FG Launches $124 Million Cholera Control Initiative
