Yield Steadies, Naira Tumbles as Nigerian T-Bills Trades Calm
Average yield steadies as the Nigerian Treasury Bills trade calm on Thursday, fixed income investors continue to seek better returns on portfolios holdings amidst falling local currency, naira.
Despite having a $41 billion war chest in external reserves to fight off speculators, and boost FX supply, the Central Bank appears unfazed with the depreciating value of Naira following the weak market intervention.
The naira depreciated by 0.01% against the United States Dollar at the Investors and Exporters foreign exchange window to close at N415.10, according to data from the FMDQ Exchange platform.
After a series of official depreciation of the local currency, the Naira continues to find a new spot level, albeit on the upward side. Black market rates worsen to N575 to N580 range as demand pressures persist.
Today, the money market witnessed pressure following a drained liquidity position which resulted in an upward adjustment in short term rates.
Accordingly, the average interbank rate climbed by 20 basis points to 15.03% following increases in both open buy back and overnight lending rates.
FMDQ Exchange data shows there was a 30 basis points drop in Open Buy Back while the Overnight rate declined 10 basis points to close at 14.80% and 15.25%, respectively.
The pressures in the money market were driven by an outflow for the net Treasury Bills issuance worth N85.00 billion following the midweek primary market auction conducted by the CBN on Wednesday.
After the auction, Alpha Morgan Capital said in a report that activities at the Nigerian Treasury Bills secondary market traded on a calm note in today’s session.
Trading records show that both the short and mid ends of the curve remained flat while the long end of the curve dropped slightly by 1 basis point. Consequently, the average yield remained flat to close at 5.48%.
Similarly, the average yield at the Open Market Operations (OMO) segment closed flat at 6.4%, according to Cordros Capital analysts report.
Amidst cold outing in the fixed income market, activities at the Federal government of Nigeria bond secondary market was bullish following contractions of 52, 4 and 2 basis points at the short, mid and long ends of the curve, respectively.
As a result of the decline, the average yield dropped off 11 basis points to close at 11.29% on Thursday amidst Debt Management Office deliberate efforts to reduce Nigeria’s debt service costs.
Meanwhile, activities at the Eurobond market was somewhat mixed as the average yield climbed slightly by 1 basis point to close at 6.52%. #Yield Steadies, Naira Tumbles as Nigerian T-Bills Trades Calm
Read more: Treasury Yield Steadies as Fixed Income Market Swings Lower
