Yield Subdued After Spot Rates on Auctioned T-Bills Fall
Godwin Emefiele, CBN Governor

Yield Subdued After Spot Rates on Auctioned T-Bills Fall

In the secondary market, the average yield was subdued, clears at 4.48 per cent on Thursday following a decline in spot rates on Treasury Bills at the Central Bank of Nigeria (CBN) primary market auction.

The CBN held its scheduled Primary Market Auction yesterday selling Treasury Bills worth ₦223.76 billion across the 91-day (₦2.69 billion), 182-day (₦3.54 billion), and 364-day (₦217.53 billion) tenors.

Auction result shows that the stop rates for 91-day, 182-day, and 364-day tenor cleared lower at 2.48 per cent, a decline of 2 bps from the previous close of 2.50 per cent.

Mid-tenored bills were priced at 3.30 per cent, fell 14 bps basis points from 3.44%, long-dated bills settled at 5.40 per cent, dropped off 10 basis points from 6.40 per cent respectively.

The auction was oversubscribed by 268 per cent, with bid-to-cover ratios settling at 4.73x (91-day), 3.96x (182-day), and 3.65x (364-day), according to fixed income traders notes.

In the money market, the average interbank rate declined following relatively healthy liquidity in the financial system on Thursday. The overnight lending rate was lessened by 0.85 per cent to close at 1.00 per cent as against the last close of 1.85 per cent.

Also, the Open Repo rate decreased by 1.00 per cent to close at 0.50 per cent compared to 1.50 per cent on the previous day. 

Data from FMDQ Exchange shows that Naira depreciated by 0.02 per cent as the dollar was quoted at ₦416.33 as against the last close of ₦416.25 at the Investors and Exporters FX window.

Currencies traders said most participants maintained bids between ₦410.00 and ₦444.00 per dollar. In the parallel market, the local currency was faced with moderate pressures due to an elevated demand side.

Amidst weak investors’ sentiment, trading activities in the Nigeria T-Bills secondary market closed on a flat note with the average yield across the curve remaining unchanged at 4.48 per cent.

Average yields across short-term, medium-term, and long-term maturities remained unchanged at 3.68 per cent, 4.05 per cent, and 5.40 per cent, respectively, according to a market update from FSDH Capital.

In the OMO bills market, the average yield across the curve closed flat at 5.65 per cent, various analysts said in their market updates. Analysts hint that average yields across short-term and long-term maturities remained unchanged at 5.31 per cent and 5.82 per cent, respectively.

Also, FGN bonds secondary market with bullish tilt as the average bond yield across the curve cleared higher by 4 basis points to close at 11.54 per cent from 11.50 per cent on the previous day.

Average yields across medium tenor and long tenor of the curve expanded by 11 bps and 1 basis point, respectively, according to FSDH Capital. However, the average yield across the short tenor of the curve closed flat.

The 27-APR-2023 and 14-MAR-2024 maturity bonds witnessed mild buying interest with a decrease in the yield of 1 basis point each, FSDH stated while the 23-FEB-2028 maturity bond was the worst performer with an increase in the yield of 19 basis points.

Furthermore, the secondary bond market may witness an uptick in trading activities in the short term due to improved system liquidity, analysts projected. #Yield Subdued After Spot Rates on Auctioned T-Bills Fall

Read: Yields on Treasury, OMO Bills Steady as Bond Clears Lower