Nigerian Treasury Bills Yield Rises to 18.8%

The average yield on Nigerian Treasury bills rose by three basis points to close at 18.8% amidst selloffs in the secondary market. The yield curve continues to shift following higher rates for one-year bills the Central Bank of Nigeria (CBN) sold at 21.5% at its recent treasury bills auction.

In a market note, Cordros Capital Limited told investors that across the curve, the average yield contracted at the short (-2bps) and mid (-3bps) segments. Traders said the contraction was driven by investors’ interest in the 87-day to maturity which plunged its yield down by two basis points.

There was also demand for 178 days to maturity, causing three basis points to decline in its associated yield. Conversely, the average yield expanded at the long rose +8bps due to selling pressures on the 332 day to maturity which gained 122bps.  Elsewhere, the average yield declined by 3bps to 18.8% in the OMO segment.

In its note, CardinalStone Partners Limited reported that the local fixed-income market bearish sentiments continue to rattle the fixed-income market, stemming largely from the aggressive government borrowings.

The investment firm noted that the government raised about N4.1 trillion across the bond and Nigerian Treasury bills markets in February, which was 5.1x higher than the borrowings in January 2024. Adding another layer of pressure on the market was the sustained hawkish stance by the CBN, as the MPR was hiked by an unprecedented 400 basis points in the February meeting.

Consequently, the average yield increased by 4% in Feb while increasing issuances in the month suck out liquidity, increasing banks’ presence at the CBN discount window.

Meanwhile, liquidity pressures persist in the money market, raising short-term benchmark interest rates higher. The overnight lending rate expanded by 78bps to 31.8%, in the absence of any significant funding pressure on the system.  #Nigerian Treasury Bills Yield Rises to 18.8% Exchange Rates Gap Drops, Firm Sets N910 as Real Naira Value
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