Nigeria Treasury Bills Average Yield surged by 68 basis point.
This is a result of reduction in holdings in the fixed income market despite spot rates adjustment expectation.
Analysts said some local deposit money banks reduced their holdings for cash to close liquidity gap as rate on the Central Bank of Nigeria (CBN) standing lending facility jerked up.
The financial system liquidity stayed negative following significant outflow for Treasury bills auction sales by the apex bank. Consequently, the Open Repo Rate (OPR) increased by 631 bps to 31.50%, while the Overnight Rate (O/N) increased by 610 bps to 31.92%.
Investors’ sentiment has been mixed due to robust liquidity access even with a negative interest yield and the huge gap between inflation (33.95%) and the benchmark interest rate (26.25%).
“The market also registered additional demand in the belly of the curve. The Treasury instrument, with a 177-day to maturity experienced rally that dragged its yield down by -1bp. Conversely, the average yield expanded at the long (+3bps) end, driven by the selloff of the 324-day to maturity (+44 bps) bill. Meanwhile, the average yield declined by 2 basis points to 23.4% in the OMO segment.
“In its market update, Cordros Capital Limited told investors that the average yield pared at the short (-1bp) and mid (-1bp) segments. Analysts attributed the yield contraction to investors’ interests in the 86-day to maturity, causing its yield to dip by 1bp.”
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