During the middle of the week, the secondary market was dominated by sellers as investors unbundled their naira asset portfolio. The average yield on Nigerian Treasury bonds increased by 10 basis points to 20.52% as a result of a naira asset selling binge.
The bearish pattern has persisted, beginning with dropping spot rates at central bank primary market auctions. As inflation fell, spot rates on Treasury bills of various maturities were gradually reduced.
Nigeria saw its second disinflation of the year, following 30 months of consecutive uptrends that left financial market participants on edge. However, the fixed income market is straining to balance disinflation and the upcoming high interest rate environment ahead of the monetary policy committee meeting next week.
While the market begins to set expectations, trading activities in the Treasury bills market have continued to experience a bearish session. On Wednesday, yield dragged as few sellers in the secondary market offered selected mid- and long-dated papers.
As a result, the average mid-rate across the benchmark Nigerian Treasury bill papers jumped. Fixed interest securities analysts at AIICO Capital Limited expect mixed sentiments tomorrow.
Across the curve, the average yield pared at the short (-1bp) end due to demand for the 85-day to maturity bills (-1bp), but increased at the mid (+25bps) and long (+5bps) segments due to selloffs.
Investors offloaded 127-day to maturity bills in the market and this caused 134bps in its yield. At the belly of the curve, investors also sell down 190-day to maturity bills, which resulted in +74bps yield surge.
Analysts at Cordros Capital Limited said the average yield expanded by 7 basis points to 23.7% in the OMO bills segment in the secondary market.
