Returns on Nigerian Treasury Bills Slide Ahead of Inflation
The average yield on Nigerian Treasury bills declined as demand for short-term investment increase in the secondary market. There was a spur in Treasury bills demand in the market on Monday as investors’ exited position in the equities market.
This plunge yields on bills lower ahead of inflation rate data for March, 2024. In the last reading, statistics office reported that headline inflation climbed to 31.70%. The nation’s running inflation is however expected to cross 32% in March as subsidies and devaluation effects are yet to fizzle out.
In the secondary market, trading activities on Naira treasury bills was mixed, albeit with a bullish tilt, as the average yield pared by 1bp to 18.9%.
In its market update, Cordros Capital Limited said across the curve, the average yield contracted at the short (-2bps) and mid (-3bps) segment.
The yield contraction followed buying interests in the 80-day to maturity which lost -2bps and 171 day to maturity bills that lost 3bps respectively. At the long end of the curve, traders reported that yield closed flat. Elsewhere, the average yield declined by 16bps to 18.2% in the OMO segment.
In the money market, Nigerian interbank borrowing rate, NIBOR, declined across all tenor gauges, indicating a shortage of liquidity in the system, according to Cowry Asset Management Limited.
Information from the FMDQ Securities Exchange showed that money market rates like the open repo rate (OPR) and overnight lending rate (OVN) surged to conclude at 25.97% and 26.31%, respectively.
Specifically, the overnight lending rate expanded by 331 basis points to 26.3%, in the absence of any significant system flows.
