T-Bills Yield Falls Below 4% as CBN Holds Auction
Trading activities on the Nigerian Treasury Bills (NTB) in the secondary market was relatively bullish with downward yield adjustment as the Central Bank (CBN) conducted a primary market auction. The fixed income market has been in quiet mode as market participants hibernate, thus the yields curve have been flattish.
At the auction held today, the CBN offered Nigerian Treasury Bills worth ₦115.28 billion across 91-day (₦2.04 billion), 182-day (₦22.86 billion), and 364-day (₦90.38 billion) tenors.
The apex bank records robust subscription levels at the auction, which was followed by adjustments in spot pricing. Treasury trading activities in the secondary market ended with average yield across the curve decreasing by 50 basis points to 3.68 per cent from 4.18 per cent on the previous day.
Traders’ notes show that the average yields across short-term, medium-term, and long-term maturities declined due to increased demand as market participants try to fulfil orders in the secondary market.
At the short end of the curve, average yield tracked down by 35 basis points, mid-tenored shed 82 basis points. Meanwhile, the long tenored bills witnessed 31 basis points decline at the same time.
NTB 11-Aug-22 (-108 bps) maturity bill witnessed maximum buying interest, according to a market report by FSDH Capital.
In the OMO bills market, the average yield across the curve decreased by 76 basis points to close at 4.94 per cent as against the last close of 5.70 per cent, traders said in their notes.
It was noted that the average yield across the long-term maturities declined by 76 basis points at the time when the OMO 16-Aug-22 (-151 bps) maturity bill witnessed maximum buying interest.
In the bond market, trading activities on FGN bonds secondary market ended with a bullish tilt as the average bond yield across the curve cleared higher by 2 bps to close at 10.98 per cent from 10.96 per cent on the previous day.
The average yield across the medium tenor of the curve expanded by 21 basis points, according to a report by FSDH Capital. However, the average yields across short tenor and long tenor of the curve declined by 1 basis point and 11 bps, respectively.
The 18-MAR-2036 maturity bond was the best performer with a decrease in the yield of 43 basis points, according to traders’ note while the 23-JUL-2030 maturity bond was the worst performer with an increase in the yield of 109 basis points.
Today, money market rates witness heavy pressures as short term interest rates adjusted upward due to a strain on liquidity in the financial system. The average interbank rate jerked up strongly as both overnight lending and open buy back rates inched upward from their lows.
Data from FMDQ Exchange shows that the Overnight lending rate increased by 3.17 per cent to close at 9.50 per cent as against the last close of 6.33 per cent. Also, the Open Repo rate increased by 3.00 per cent to close at 9.00 per cent compared to 6.00 per cent on the previous day. #T-Bills Yield Falls Below 4% amidst CBN Auction
Read: Fixed Income Market Trades Mixed as Yields Rise and Fall
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