T-Bills Trades Quiet as Bond Yields Rise to 13.5%

T-Bills Trades Quiet as Bond Yields Rise to 13.5%

T-Bills Trades Quiet as Bond Yields Rise to 13.5%


Trading activities in the Nigerian Treasury bills market was quiet following an upward adjustment in spot rates across various tenored and relatively flattish liquidity in the financial system.

Meanwhile, the Nigerian local currency continues to losing value across the foreign exchange markets as demand outweigh aggregate supply – the core reason for persistent weakness in the exchange rate in the Africa’s most populous and largest by balance sheet size.

Data from FMDQ Exchange showed that on Wednesday, the naira depreciated by 0.1% to N437.50 per United States dollar at the Investors and Exporters FX window.

Elsewhere, short term rates were relatively steadies in the money market. Traders said in market notes that the overnight lending rate was flat at 16.8%.

It was noted that the system liquidity settled at N352.75 billion- net long position. Opening market liquidity was reported at N1.1 trillion on Friday while overnight and repo rates closed within a range of 15% – 20.5%.

The significant increase in money market rates has been attributed to market illiquidity, as the outflow from the NTB primary market auction worth N179.3 billion combined with higher cash reserve ratio debits.

This is estimated following a recent 500 basis points increase on the  banking sector cash reserve ratio to 32.5%, outweighed the inflow from FAAC disbursement and FGN bond coupon payments. READ:Bond Yield Rises, T-Bills Sees Buying Interest as Naira Falls

Coronation Research analysts  expect rates in the money market to trend upwards this week as outflow from OMO bills and FX auctions outweigh inflow from OMO maturities valued at N60 billion.

Following thin trading record level seen in the treasury bills market, the average yield was unchanged at 7.2%. Similarly, the average yield remained flat at 10.3% in the OMO bills segment.

Bond market was however bearish, as the average yield expanded by 14 basis points to 13.5% due to selloffs. Across the benchmark curve, Cordros Capital said in a report that the average yield expanded at the short (+19bps), mid (+10bps), and long (+13bps) segments.

Trading records showed holders, investors offloaded the MAR-2027 (+66bps), APR-2032 (+21bps), and MAR-2035 (+52bps) bonds, respectively.

# T-Bills Trades Quiet as Bond Yields Rise to 13.5%#