Yield Steadies at 3.65% after CBN T-Bills Auction

Yield Steadies at 3.65% after CBN T-Bills Auction

Trading activity at the secondary market for Nigerian Treasury bills (NTB) ended on a quiet note on Tuesday after the Central bank of Nigeria (CBN) primary market auction (PMA) sales on Wednesday.

Today, the average yield steadies at 3.65% on account of a thin trading session as investors shifted attention to auction sales in the primary market amidst election uncertainties.

In 2023, the yield on short-dated instruments has been on declined on account of healthy liquidity in the financial system, driving subscription levels at CBN auction upward. T-bill yield had printed at 11% last year but yearend Bull Run dragged the curve lower.

Following sustained bullish activities on short-term instruments, the government has been able to reduce the apex bank funding costs as spot rates fell to a single-digit low. Nigerian Banks Give Fresh Update on Naira Swap

Market analysts said told MarketForces Africa that the rates repression appears to be coming to an end following a strong rise in spot rates at the last auction.  This lifted the average yield on treasury instruments to 4% on average.

At the last auction sales conducted by the apex bank, there were massive rates repricing across tenors as demand slowdown. An unstable liquidity level appears to trigger new rates’ repricing mood.

In the market, activities in the Nigerian Treasury bills were muted, as participants anticipated the result of today’s primary auction. Thus, the average yield was unchanged at 3.65%. Similarly, the average yield closed flat at 3.0% in the OMO bills segment.

In the money market, short-term benchmark rates spiked as liquidity levels reduce. Investment analysts said the Nigerian interbank offer rates rose across the board for all maturities as banks with liquidity requested higher rates.

Due to funding pressures in the market, the open repo rate (OPR) and the overnight lending rate (OVN), climbed to 10.63% from 10.50% and 11.00% from 10.81%, respectively. Yield Steadies at 3.65% after CBN T-Bills Auction

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