Nigerian Treasury Bills Yield Rises 2bps to 3.29%



Nigerian Treasury Bills Yield Rises 2bps to 3.29%

Nigerian Treasury Bills Yield Rises 2bps to 3.29%

Following selloffs on short-dated instruments in the secondary market, the average yield on Nigerian Treasury bills inched upward by two basis points (2bps), according to a slew of fixed income market analysts, to 3.29%.

Liquidity level in the financial system had steadied, thus driving buying interest across the local debt capital market in the recent past despite the fact that the apex bank tightened access to funding against authorised dealers participating in its auction late last year.

Recent market data indicates that trading activities in the Nigerian Treasury bills market have been bullish strongly. Higher demand for secondary market traded bills has dragged average yield lower significantly.

Also, spot rates on 91-day, 181-day and 364-day treasury bills have tumbled due to record subscription levels seen in the Central Bank of Nigeria (CBN) primary market auctions. A double-digit high inflation rate continues to expose naira assets to risk.

Ahead of the monetary policy committee meeting, economists and analysts have been projecting possible interest rate adjustments but without consensus as Nigeria’s consumer price index (CPI) figure for December declined. >>>Nigeria’s 10-Year Bond Yield Falls 280bps to 12.24%

Based on the market data review for January, liquid level appears to have stabilised in recent weeks. In a note, Cowry Asset Management Limited said on Wednesday that the Nigerian Interbank offered rate fell across the board for most maturities tracked.

Likewise, other measures of money market stress eased further as local banks with liquidity sought lower rates, according to analysts. Nigerian banks, pension funds administrators and other asset managers have been bullish in the segment since late 2022. 

Short-term benchmark rates, both the open repo rate and the overnight lending rate remained unchanged at 9.50% and 9.83%, respectively. Analysts at Cordros Capital said in a market brief that the average system liquidity closed at a net long position of N384.58 billion.

Across the Treasury bills curve, the average yield expanded at the short (+4bps) end following profit-taking on the 8-day to maturity (+72bps) bill, according to a market note from Cordros Capital Limited. The yield closed flat at the mid and long segments. 

Elsewhere, the average yield was flat at 2.9% in the open market operations (OMO bills) segment. In 2023, stop rates on the 91-day, 182-Dday, and 364-day Treasury bills instruments have sustained downward movement.

The decline in stop rates was due to high investors’ demand for the instruments, as the total subscription exceeded the amount offered, according to market analysts, saying buying activities in the secondary market were served over an unmet demand at the primary auction. #Nigerian Treasury Bills Yield Rises 2bps to 3.29%

>>>Nigeria Economic Growth to Slow Down in 2023 –GlobalData Forecasts

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