Notwithstanding negative interest rates and inflation worries, portfolio investors’ interest in naira assets resulted in a decline in the average yield on Nigerian Treasury bills. The secondary market saw a sharp increase in demand for bills maturing in 24 and 171 days. Long-dated bills were not in high demand.
The OMO bills space showed a similar pattern. OMO bills were more popular among investors after last week’s primary market auction, which saw bids go down. Owing to the optimistic outlook, dealers said that the average yield decreased little, falling 2 basis points to 21.7%.
Across the curve, Cordros Capital Limited told investors via email that the average yield contracted at the short (-3bps) and mid (-3bps) segments. The contraction in yields followed buying interests in the 24 day to maturity, whose yield shed 4 basis points, and 171-day to maturity bills with a 4 basis point decline in yield.
The yield stayed flat at the long end. Similarly, the average yield dipped by 4 basis points to 21.4% in the OMO bills segment in the secondary market. In the money market, pressures in the financial system persisted. Due to level of liquidity pressures, short term benchmark interest diverged.
The interbank rates— diverged with open repo rate, which increased by 9 basis points to 29.19%. However, the overnight lending rate contracted by 12 basis points to 29.82% in the absence of any significant inflows into the system.
