Prior to the main market auction set for Wednesday by the Central Bank of Nigeria (CBN), the average yield on Nigerian Treasury Bills (NTB) slightly decreased to 8.4% at the beginning of the week.
The apex bank would use the primary and secondary markets to roll over maturing T-bills totaling N303.22 billion. 91-day bills worth N9.96 billion, 182-day bills worth N10.21 billion, and 364-day bills costing N283.04 billion will be included in the offer.
In an update, Cowry Research informed investors that it anticipates an increase in the stop rates for the 364-day treasury instrument due to anticipated pressure on the liquidity of the financial system.
Yesterday, the overnight lending rate expanded by 351 basis points to 23.3% as a result of significant funding pressure on the system. The repo rate declined by 2.31 percentage points to 22.50%. Traders said they envisage lower yields in the Treasury bills secondary market as the anticipated inflows into the financial system will likely fuel bargain hunting in bills.
In a market update, Cordros Capital told investors its analysts expect market focus to be shifted to the primary market auction holding on Wednesday. In the secondary market, the Treasury bill traded with mixed sentiments, albeit with a bullish tilt, as the average yield pared by 1 basis point to 8.4%.
Across the curve, traders said the average yield closed flat at the short and mid segments but contracted at the long (-1bp) end following mild interests on the 339 days to maturity (-1bp) bill. Similarly, the average yield pared by 1bp to 11.2% in the OMO bill segment.
In the past week, T-bills and OMO activities were subdued due to the absence of maturing bills. This further put pressure on liquidity as the deposit money banks were already facing funding pressure from bond auctions.
