Treasury Bill Yield Climbs to 18.3% after Rates Repricing

The average yield on Nigerian Treasury bills hit 18.3% in the secondary market, a day after the Central Bank (CBN) repriced 364-day bill to 21.45% during the week. Following the rates repricing that happened at the primary market auction, investors in the secondary market offloaded their naira assets.

Based on their short-term views, a slew of fixed income analysts across Broadstreet maintained that yield would remain elevated in the first half of 2024 due to monetary policy tightening. The large Treasury bills auction sales on Wednesday worsened liquidity level in the financial system. Short-term benchmark interest rates run amok, breaching the red line in the money market.

According to data from the FMDQ platform which displayed money market rates, the overnight lending rate expanded by 111 basis points to 31.6%, following the debits for the net NTB issuance worth N979.79 billion, according to Cordros Capital Limited.

The open repo rate closed at 31.08% as funding pressures drove the interbank rate upward while banks scrambled for funding. This spike was attributed to the recent efforts by the CBN to mop up excess liquidity through Open Market Operations (OMO) and Nigerian Treasury Bills (NT-bills) auctions, resulting in rising yields.

At the secondary market for Nigerian Treasury bills trading, the average yield expanded by 73 basis points to 18.3%, fixed income analysts at Cordros Capital Limited stated in an email shared with clients.

Traders reported that across the curve, the average yield advanced at the short (+18bps), mid (+120bps) and long (+83bps) segments.

The surge in yield curve followed sell pressures on the 91-day to maturity which gained +132bps, yield on 154-day to maturity rose by 203bps as investors offloaded the assets.  Also, the yield on 259 day to maturity advanced by 144bps due to bearish trade on the asset.

Elsewhere, the average yield declined by 10bps to 18.9% in the OMO bills segment in the secondary market on Thursday, after primary market auction sales which target foreign investors. #Treasury Bill Yield Climbs to 18.3% after Rates Repricing
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