Tuesday saw a further decline in the average yield on Nigerian Treasury notes as the stocks market remained popular despite the fixed income sector’s negative real return on naira assets.
Despite rising interest and inflation rates, spot rates across all tenor instruments decreased during the Central Bank of Nigeria’s (CBN) main market auction. The market’s increased liquidity helped to support the decline in spot rates.
The apex bank issued and distributed Nigerian Treasury notes valued at N180.4 billion to market participants in the most recent primary market auction, which was held on Wednesday.
The three tenors’ stop rates varied, according on the auction outcomes. 91-day, 182-day, and 364-day bonds were auctioned by the CBN for 2.29%, 4.99%, and 7.99% respectively, from 4.50%, 6.44%, and 8.99%.
Financial system liquidity was reported to have decreased by 17.7% today to close at $229,11 billion, according to market participants. Market liquidity was recorded at N278.4 billion on Friday thanks to an FAAC inflow and an NTB maturity.
The interbank financing rates remained constant at 12.75% and 13.25% levels notwithstanding the decline. The market anticipates an increase in OMO maturities of N20 billion to boost liquidity levels.
Coronation Research stated in its market brief that it anticipates rates in the money market to trend higher since the anticipated outflow from a probable CRR debit by the CBN would probably exceed the anticipated inflow from an OMO maturity and an FX refund.
Treasury bill trading finished on a high note in the secondary market. 20 basis points were lost from the average yield to
Fixed income traders and analysts said across the curve, the average yield closed flat at the short and mid segments but declined at the long (-33bps) end, following demand for the 303-day to maturity (-100bps) bill.
Notably, the Mar-24 and Apr-24 papers attracted the most traction as yields dipped by 68 and 18 basis points, respectively, TrustBanc Capital told investors in a market brief.>>Naira Steadies as Banks Issue Update on FX Purchase
As money market stress eased, Cowry Asset Management Limited briefed investors that banks with liquidity demanded lower rates on Tuesday. Meanwhile, local banks’ activities at the CBN standing lending facility have been reduced strongly.
Analysts saw short-term benchmark rates, such as the open repo rate and the overnight lending rate, remained unchanged at 12.75% and 13.25%, respectively.