Due to investor selling of assets denominated in naira, the average yield on Nigerian Treasury bills increased by 36 basis points on Wednesday in the secondary market. Due to widespread negative perceptions created by economic concerns, the financial market fell precipitously.
On Wednesday, there were sell pressures in the equity market, the naira exchange rate approached N1500 per US dollar, and fixed interest securities sold off their holdings of Nigerian Treasury notes.
The risk-off mentality caused the average yield to increase by 36 basis points, or 22.1%. Firms stated that the average yield pared at the short (-1bp) and mid (-1bp) segments in their respective investment notes.
The yield contraction followed demand for the 92-day to maturity, whose yield dipped -1bp, according to Cordros Capital Limited in a note.
There was buying interest at the belly of the curve. Demand for 169-day to maturity bills dropped by -1bp. On the other hand, the market witnessed selloff at the end of the curve.
As such, yield advanced at the long end by 40bps as market participants sold off the 351-day to maturity whose associated yield rose +25.46 percentage points. Similarly, the average yield increased by 60bps to 22.0% in the OMO bill segment in the secondary market.
In the money market, the Nigerian interbank borrowing rate advanced by 3.78% to hit 30.17%, as illiquidity pressure return, Cowry Asset said in its market update.
Additionally, key money market rates such as the Open Repo Rate (OPR) and Overnight Lending Rate (OVN) advanced by 1.74% and 1.76% to reach 29.68% and 30.26%, respectively. Money market rates inched higher following the settlements for the OMO bills auction worth N513.95 billion conducted on Tuesday by the Central Bank of Nigeria.
