The average yield on Nigerian Treasury bills fell in the secondary market due to strong demand for Naira assets. Local investors are drawn to the fixed income securities market because of its high yield. The fixed-income asset surge has dampened favorable trade activity in the stock market.
Asset managers’ appetite increased as they expected inflation to improve further. At the main auction, investors made large bets on Treasury bills. The apex bank’s primary market auction resulted in spot rate decreases across standard maturities due to missed bids.
The monetary authority also allotted Nigerian Treasury bills of significantly less amount to investors who sought to park funds in short term borrowing instruments at rates currently below the consumer price index.
At the midweek auction conducted on behalf of the Central Bank, the Debt Management Office (DMO) sold the exact amount offered totaling about N161.88 billion to market participants.
The rates for the 91-day, 182-day, and 364-day closed at 16.63% (-37 bps), 17% (-50 bps), and 18.59% (-35 bps), respectively. Overall, the average mid-rate settled at 19%. Across the curve, traders reported that the average yield declined at the short (-5 bps), mid (-1 bp), and long (-2 bps) segments.
The yield contraction was driven by participants’ demand for the 57-day to maturity whose yield lost -31 bps. At the belly of the curve, demand for 176-day to maturity bills caused its yield to slump by a basis point.
At the end of the curve, demand for 288-day to maturity dragged yield lower by -54 bps. Meanwhile, the average yield expanded by 5 basis points to 23.6% in the OMO bills segment in the secondary market.
