Yield Steadies as Market Sees Spot Rates Swing, Bond Falls 16bps

Yield Steadies as Market Sees Spot Rates Swing, Bond Falls 16bps

The average yield on Nigerian Treasury Bills steadies on Thursday due to thin trading activities in the secondary market but Federal Government (FGN) bond yield trackS lower by 16 basis points, traders said.

Sustaining its downward trend, short term rates dip further in the absence of pressures on the financial system liquidity. According to market data tracked, the average interbank rate dropped by 33 basis points to close at 4.75% as the Open Buy Back and Overnight rates declined despite a N30.90 billion outflow for net Nigerian Treasury bills issuances.

Open buy back and the overnight lending rates declined by 33 basis points individually to close at 4.50% and 5.00%, respectively. Trading activities in the Treasury bills secondary market were quiet, as the average yield closed flat at 3.2%, traders said with pockets of trades witnessed at the longer end of the curve.

At yesterday’s primary market auction, the Central Bank of Nigeria (CBN) offered N143.29 billion for sale with a total subscription of N247.61 billion. Accordingly, the CBN allotted N13.88 billion for the 91-day, N20.00 billion for the 182-day, and N139.96 billion for the 364-day bills.

The auction shows mixed results. The spot rate for the 91-day bill rises to 1.75% from 1.74%, the 182-day bill was flattish at 3.00% while the long-tenored bill rises to 4.45% from 4.00%. 

Similarly, the average yield stayed flat at 3.6% in the open market operation (OMO) segment, Cordros Capital said in a market note.

In the FGN Bond secondary market, trading activities were bullish as the 2025s and 2031s maturities witnessed the most demand, Alpha Morgan Capital. However, traders hint there were some buy-side pressures seen on the 2026s, 2027s, 2035s, and 2042s maturities.

Consequent to the demand level which raised the bond price, the average yield dropped by 16bps to close at 10.59%. While there was a cautious trading pattern in the local fixed income market, activities at the FGN Eurobond space were mostly bullish.

Traders saw buying interests across the sovereign curve except for the Jun-2022 instrument which witnessed some sell-side pressures. In sum, the average yield was down by 9 basis points to close at 7.61%, according to Alpha Morgan Capital. #Yield Steadies as Market Sees Spot Rates Swing, Bond Falls 16bps

READ: Average Yield on Bond Spikes 16bps over Aggressive Repricing