Yield Shrinks to 15.4% as Demand for Treasury Bills Rises
The average yield on Nigerian Treasury bills shrank in the secondary market as investors ramped up short-term borrowing instruments. Deposit money banks and other authorised dealers have kept demand for bills steadied with occasional sell-down.
In the fixed income market, yields have remained elevated following a worsening consumer price index. Despite staying at double digits, the market has continued to accept negative interest yield ahead of policy rate hike expectations.
Given the sustained interest in naira assets amidst weak macroeconomic conditions, the average yield on Treasury bills declined moderately, down by 3 basis points to 15.4% on Monday. Across the curve, traders at Cordros Capital Limited said in a note that the average yield contracted across the short (-1bps), mid (-2bps) and long (-5bps) segments.
The contraction followed investors’ demand for the 80-day to maturity, 171-day to maturity and 353-day to maturity (bills, respectively. The yield on short-dated Treasury bills for 80 days was reduced by 2 basis points to demand, the decline registered at the belly of the curve. The market also cut down the yield on 353 days to maturity bills by 30 basis points.
Similarly, the average yield declined by 3 basis points to 17.8% in the open market operation (OMO) bills segment in the secondary market ahead of the monetary policy committee (MPC) meeting of the Central Bank of Nigeria (CBN) on February 26, 2024.
In the bond market, trading in the FGN bonds was calm, as market participants shifted focus to the FGN bond auction. Consequently, the average yield was unchanged at 16.2%.
Elsewhere, liquidity pressures on the financial system resurface following debt management office primary market auction sales on Monday. Short-term benchmark interest rates accelerated as analysts expected liquidity to tighten due to limited inflows from maturing instruments.
Consequently, the overnight lending rate expanded by 57 basis points to 17.5% in the absence of any significant inflows into the financial system yesterday. #Yield Shrinks to 15.4% as Demand for Treasury Bills Rises Court Orders FCMB to Deposit N540m Defamation Damage Awarded to Prophet Omale
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