The average yield on Nigerian Treasury bills fell further at the start of the week, closing at 20%. The yield contraction comes after the central bank reduced spot rates on standard maturities sold to investors in the primary market auction.
The Debt Management Office (DMO), which handled the auction on behalf of the Central Bank of Nigeria (CBN), lowered the rate after investors placed large wagers on local borrowing instruments. Despite the banking system’s low liquidity, both Treasury bills and OMO auctions were relatively oversubscribed.
The bullish sentiment was brought forward into the new week, causing the average yield to shrank by two basis points on Monday. The average yield increased at the short (+6 bps) and long (+10 bps) ends, according to Cordros Capital Limited.
The shift in the yield line was driven by profit-taking on the 73-day to maturity and 290-day to maturity bills, respectively.
Meanwhile, the average yield declined by 31 bps in the mid-segment due to strong demand for the 94-day to maturity (-52 bps) bill. Similarly, the average yield declined by 1 bp to 23.3% in the OMO bills segment in the secondary market.
In the money market, the Nigerian interbank rate rose across all tenors as money market conditions tightened, with banks holding liquidity seeking to capitalize on higher rates.
However, key money market rates such as the Open Repo Rate (OPR) and Overnight Lending Rate (O/N) decline.
