Fresh Demand for Nigerian T-Bills Drags Yield to 16%

The average yield on Nigerian Treasury bills slid marginally following renewed buying momentum on naira assets in the secondary market. This is coming ahead of expected inflation surge and interest rate hikes, major catalysts that the market expects to drive yield repricing.

The level of funds in the financial system had helped to keep rates on issuance lower until the apex bank reversed the trend last week with a 19% spot rate on 364-day bills. In the absence of strong inflows from maturing debt instruments, analysts expect liquidity in the market to remain tight.

In the money market, short-term benchmark interest rates nosedived as a result of robust liquidity in the financial system. Then, the overnight lending rate contracted by 90 basis points to 16.1%.

Meanwhile, buying interest on treasury bills in the secondary market dragged the yield curve lower. The average yield declined by 4 basis points to 15.3%.

In its market update, Cordros Capital Limited told investors that across the curve, the average yield dipped across the short (-1bp), mid (-2bps) and long (-6bps) segments.

The decline was driven by demand for the 87-day to maturity (-2bps), 178-day to maturity (-2bps) and 360-day to maturity (-47bps) bills, respectively.

Similarly, the average yield contracted by 3 basis points to 17.9% in the OMO segment. On Monday, money market rates, such as the open repo rate and overnight lending rate declined by 0.12% and 0.90% to 15.38% and 16.10%, respectively.

Elsewhere, trading activities in the FGN bond secondary market were bearish, as the average yield expanded by 6 basis points to 15.6%.  #Yield Slides as Investors Bet on Nigerian T-Bills#

Afrinvest Mutual Funds Delivers 12.7% Return YTD