The average yield on Nigerian Treasury bills increased to around 24.2% in the secondary market as local deposit money banks sold investment instruments to fulfill financing needs.
According to AIICO Capital, the majority of selling interest was centered on short- and medium-dated securities as market players attempted to satisfy their financing requirements.
The liquidity constraint in the financial markets has remained robust, with money market rates running over 32% since the central bank raised the standing lending portfolio rate to 31.7% in September.
Banks, at the heart of the financial markets equation, went inward in their hunt for money by selling off treasury bill holdings. This pushed the average yield higher, but financing pressures only eased with minor rate changes; short-term benchmark interest rates remained high.
The Overnight Policy Rate (OPR) declined by 3 basis points to 32.33%, while the Overnight Rate (OVN) dropped by 44 basis points to 32.56%. The market’s liquidity balance remained low ahead of the Central Bank of Nigeria’s (CBN) primary market auction in the next week.
The market predicts cautious trade with a mixed tone, as there will be a Treasury bills auction for ₦374.67 billion across standard tenors this week.
In its note, Cordros Capital Limited said the average yield expanded by 100 basis points to 24.2% in the Nigerian Treasury bills segment and inched higher by 1bps to 25.9% in the OMO bills segment.
“We believe the projection of a better liquidity position next week will boost demand for bills, thereby driving down yields in the secondary market”, analysts said.
Nigerian Interbank Treasury Bills True Yield (NITTY) experienced upward movement across all maturities, while the average secondary market yield on T-bills rose, settling at 24.16% due to sell-sentiment, Cowry Asset Limited added.
The liquidity balance in the financial system was lifted high by N28.22 billion inflows from FGN bond coupon payments. Analysts said the inflows were insufficient to provide support system liquidity, causing the overnight lending rate to remain elevated.
Consequently, the average liquidity position declined, closing at a net short position of N1.51 trillion from a net short position of N643.66 billion in the previous week.
