On Monday, the investors engaged in some buying activities in secondary markets. The average yield on Nigeria treasury bills decreased by 21 basic points. This market action followed a recent inflation increased to 31.70%, as it increased by 1.80%.
Market participants sought to park funds into bills at the secondary market to compensate for lost bids at the primary market auction last week. The Central Bank of Nigeria (CBN) offer size was significantly below N1.5 trillion subscription level placed by investors. This was in contrast to previous auction sales the CBN sold when foreign investors showed interest.
Analysts said, the CBN slashed spot rates across 91-day, 181-day, and 364-day bills allotted to investors at the auction.
“The reason for the lower allotment of N160 billion in the last auction was because foreign investors made no bids versus earlier offers,”
Yields remained elevated as the market confronted high inflation conditions. Still, interest yield remains negative, though investors are expecting the gap to close on the expected higher return on fixed interest securities. Last week’s lost bids filtered into the secondary market, causing increased demand for Treasury bill instruments.
The positive sentiment treasury asset impacted the yield curve. The average yield declined by 21 basis points to 18.5%. Across the curve, the average yield contracted at the short (-2 bps), mid (-24 bps), and long (-29 bps) segments, according to Cordros Capital Limited.
This is a result of fixed-income investors’ bargains in the 80-day to maturity (-3bps), 178-day to maturity (-147bps), and 339-day to maturity (-244bps) bills, respectively. Similarly, the average yield dipped by 4 basis points to 18.8% in the OMO bills segment in the secondary market.
Elsewhere, the FGN bond secondary market traded with bearish sentiments as the average yield expanded by 9 basis points to 18.4%. Cordros Capital Limited stated that across the benchmark curve, the average yield advanced at the short (+2bps) and long (+16bps) ends as players sold off the MAR-2025 (+5bps) and JUN-2038 (+91bps) bonds, respectively.
The interbank rates diverged. The open repo rate rose by 7 basis points to close at 30.36%, while the overnight settled at 30.46%, declining by 61 basis points.
