During the primary market auction, investors in fixed interest instruments became more eager to purchase Nigerian Treasury bills in the secondary market.
Due to investors’ focus on the primary market auction held on Wednesday to refinance maturing bills, secondary market trading activity was comparatively quiet.
The subscription level at the auction held by the Debt Management Office (DMO) on behalf of the Central Bank of Nigeria (CBN) in an attempt to remove excess liquidity from the economy was expected to be impacted by the market’s liquidity strain, according to analysts.
According to statistics from the FMDQ platform, the short term interest rates were raised once again while system liquidity remained negative.
Thus, the Open Repo Rate (OPR) increased by 8 bps to 32.10%, while the Overnight Rate (O/N) expanded by 21 bps to 32.576%. Due to buying momentum experienced today, the average yield contracted by 3bps to 23.5%, according to Cordros Capital Limited.
The investment firm said in its report that the average yield declined at the short (-1bp), mid (-1bp), and long (-5bps) segments. Traders associated the yield contraction to investors interests in the 78-day to maturity, causing its associated yield to bump by 1bp.
The market also witnessed demand for 169 day to maturity bills whose yield dipped by -1bp while interest in 316-day to maturity caused its associated yield to decline by -41bps. Similarly, the average yield dipped by 2bps to 24.3% in the OMO segment.
“We expect tomorrow’s session to be partly impacted by the NTB auction result and partly driven by the tightness in system liquidity,” AIICO Capital Limited told investors in a note.
