The average yield on Nigerian Treasury bills increased by six basis points to 23% in the secondary market, as the market anticipates new auctions.
Moderate selloffs occurred at the short end of the curve in the secondary market after the July inflation drop heightened expectations of a benchmark interest rate change.
Yesterday, the Nigerian Treasury bills secondary market saw increased demand in the belly and long end of the curve, in contrast to a short position on 15-day to maturity instruments.
Despite the financial system’s liquidity crunch, bill buying has gained traction due to the high yield, causing investors to continue to store capital in naira assets.
In the money market, banks experienced excess liquidity following today’s T-bills maturity, which prompted an uptick in the use of the Standing Deposit Facility, Cowry Asset Limited told investors in an email note.
Hence, key money market rates such as the Open Repo Rate (OPR) and Overnight Rate decreased by 764 and 776 basis points to 26.05% and 26.60%, respectively, as confirmed by data from the FMDQ platform.
Treasury analysts said the average yield expanded at the short (+94bps) end following profit-taking on the 15-day to maturity (+158bps) bill.
On the other hand, yield contracted at the mid (-50bps) and long (-18bps) segments as participants demanded the 155-day to maturity, which caused its yield to by 119bps and investors’ interest in 246-day to maturity dragged yield downward by -195bps.
Conversely, the average yield contracted by 8 basis points to 25.7% in the OMO bills segment in the secondary market
Analysts hint that the Nigerian Interbank Treasury Bills True Yield (NITTY) declined across maturities as investor sentiment weakened following today’s NTB auction. This shift in sentiment led to bearish momentum in the secondary market for Nigerian Treasury Bills.
