Nigerian Treasury note rates have fallen below 20% on average as a result of persistent buying demand in the secondary market. Strong purchase sentiment across short, mid, and long tenors drove the yield decrease.
As a result, the average yield retraced 0.03% to 19.91%, as per the investor note from Cowry Asset Management Limited. Due to inflation undermining the value of the naira, demand for short-term investment instruments has surged. This helps the market for fixed-interest securities by somewhat supporting the yield inversion.
During the first quarter of 2024, inflation is predicted to worsen despite a double-digit high benchmark interest rate. The local currency has significantly declined in value over the past year, and the future is still unclear.
Demand for Nigerian Treasury bills by investors seeking inflation protection has now dragged the average yield below the 20% mark—from 25% after the apex bank spot rate repricing. The buying momentum was supported by a solid liquidity level in the financial system yesterday.
In its market update, Cowry Asset Management told investors that the Nigerian Interbank Offered Rate (NIBOR) declined by 28 percentage points to 30.58% on Monday.
The investment firm stated that the decline indicates the availability of liquidity in the system. But the short-term benchmark interest rate moved on the negative side.
Data from the FMDQ Securities Exchange platform showed that key money market rates such as the Open Repo Rate (OPR) and Overnight Lending Rate (OVN) increased, closing at 30.38% and 31.09%, respectively.
