Treasury Bills Yield Steadies as CBN Reprices Rates
Trading activities on Nigerian Treasury bills ended in a quiet mood amidst declining liquidity in the financial system. Fund managers and other market participants shifted focus to the primary auction.
At the auction, the CBN offered N211.71 billion across the standard maturities. While demand was strong, as evinced by the 5.8x bid-to-offer, only N561.71 billion was allotted, Cardinalstone said in an email to investors.
Stop rates across the 91-day and 182-day bills rose by 100bps apiece to settle at 8.00% and 12.00%, respectively, while remaining unchanged on the 364-day bill at 16.75%.
Thus, the average yield was unchanged at 12.7% amidst an expectation that the financial system liquidity would descend further due to near-zero maturing instruments in the market.
Across the curve, the average yield was flat at the short and mid segments but contracted at the long (-1bp) end as participants demanded the 337-day to maturity bill. Due to this buying momentum, the long-dated bills yield declined by a basis point.
Meanwhile, the average yield pared by 1bp to 14.7% in the OMO bill segment. Similarly, the FGN bonds secondary market traded in a lull as the average yield closed flat at 15.9%.
Data from FMDQ showed that the open repo rate (OPR) and the overnight lending rate (OVN) increased by 0.90% and 1.34% to 23.83% and 25.17%, respectively.
The overnight lending rate expanded by 133 basis points to 25.2%, despite the inflow from FGN bond coupon payment worth N9.44 billion. Closing the day tight, the average secondary market yield on the Nigerian Treasury Bills was quiet at midweek, as the average yield remained unchanged at 12.67%.
