Yields on Treasury Bills Steady as Bond Climbs to 12.9%
The average yield on fixed income instruments was mixed on Tuesday amidst the expectation that Nigeria’s headline inflation rate will worsen further; thus widening negative real return on naira assets.
Due to the high inflation rate, naira assets have been relatively unimpressive to market participants that have continued to demand higher spot prices on government instruments.
“We expect yield in the fixed income market to expand as the Nigerian government will continue to source funds in the debt capital market”, SAMTL said in its monthly economic & financial market outlook report.
In the money market, financial system liquidity was healthy as short-term rates slowed down again, according to data obtained from the FMDQ Exchange platform. READ: Yield on Nigerian Treasury Bills Climbs 18 Basis Points
On Tuesday, the overnight lending rate contracted by 33 basis points to 12.8%. In its market note, analysts at Cordros Capital attributed the decline to the absence of any significant inflow into the system.
Meanwhile, the Treasury bills’ secondary market traded quietly as the average yield was unchanged at 7.7%. Elsewhere, market analysts stated that the average yield contracted by 29 basis points to 10.8% in the open market operations (OMO bills) segment.
There was sell pressure in the bond secondary market. Trading activities in the segment ended mixed, albeit with a bearish bias, as the average yield inched higher by 1bp to 12.9%.
Across the benchmark curve, the average yield closed flat at the short and long ends but expanded at the mid (+5bps) segment as investors sold off the FEB-2028 (+19bps) bond. # Yields on Treasury Bills Steady as Bond Climbs to 12.9%
