Investors in the Nigerian fixed-income market have intensified their Treasury Bills (T-Bills) purchases ahead of the Primary Market Auction (PMA) slated for Wednesday, spurring a slight decline in average yields in the secondary market.
Market activities opened on a steady note with a bullish bias as improved liquidity in the money market encouraged buying interest. According to traders, while ample liquidity was available in the financial system, market participants maintained a cautious approach in anticipation of the upcoming T-Bills auction.
Investor bids surged as market players aimed to capitalise on potential yield declines at the auction and deploy surplus liquidity. The most traded instruments included T-Bills maturing in March, April, June, July, and December, with local investors particularly drawn to the attractive yields on longer-dated bills.
In a statement by TrustBanc Financial Group Limited noted that Local investors leveraged attractive yields, particularly at the far end of the curve, with mild traction for November and December bills.
As a result, the average benchmark yield across the secondary market contracted by 6 basis points (bps) to settle at 25.51%.
The decline in average yields was broad-based, with reductions recorded at the short (-5 bps), mid (-5 bps), and long (-6 bps) segments of the curve. This was driven by heightened demand for bills maturing in 80 days (-5 bps), 171 days (-5 bps), and 318 days (-6 bps).
Conversely, the Open Market Operations (OMO) segment saw an expansion in average yields by 36 bps to 27.5%.
Analysts predict a quiet session leading up to Wednesday’s PMA as investors prepare their bids, anticipating possible adjustments in yields. With the current liquidity surplus, the auction is expected to attract robust participation from market players keen to optimise their portfolio positions.
The Treasury Bills market remains a key avenue for liquidity management and short-term investment, and this pre-auction activity underscores investors’ confidence in the fixed-income segment despite prevailing economic conditions.
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