Amidst economic worries, selloffs of Nigerian Treasury bills (NTB) in the secondary market caused an increase in the average yield. Following the biggest depreciation of the naira in financial market history, inflation is expected to increase.
Despite the impact of the economy on company performance, market analysts predict that the monetary authority will not have the policy luxury to lower the benchmark interest rate during its meeting in February.
There were selloffs of naira assets ahead of today’s Central Bank of Nigeria (CBN) primary market auction; the equities market has followed suit in the most recent bear runs.
Because of the substantial liquidity in the financial system, fund managers and other authorised dealers are preparing for the apex bank auction. Forecasts indicate that demand will stay high.
Market data showed that system liquidity improved, forcing short-term benchmark interest rates to decline sharply. The overnight lending rate contracted by 590 basis points to 17.0%, investment firm Cordros Capital Limited said in an update.
Key money market rates, such as the open repo rate (OPR) and overnight lending rate (OVN) declined by 6.10% and 5.90% to 16.00% and 17.00%, respectively, according to Cowry Asset Limited. Nigeria Eurobond Slumps after CBN Resumes OMO Auction
The decline in rates came following the inflows from OMO bills maturities worth N25.00 billion. Then, the OMO bill secondary market ended cold as the average yield was flat at 9.6%. Traders reported that activities in the Treasury bills secondary market were bearish, as the average yield expanded by 206 basis points to 11.9%.
Across the curve, the average yield expanded at the short (+53bps), mid (+198bps), and long (+294bps) segments. The uptick was a result of sell pressures on the 79-day to maturity (+128bps), 170-day to maturity (+252bps) and 324-day to maturity (+515bps) bills, respectively.
