The average yield on Nigerian Treasury and OMO bills declined in the secondary market on Monday, as increased investor demand lifted prices across the curve. The bullish sentiment followed a mixed performance in the previous week, aided by excess liquidity in the financial system.
System liquidity eased to ₦750.31 billion, down from ₦1.61 trillion a week earlier, largely due to the Central Bank of Nigeria’s liquidity mop-up activities, which saw ₦2.12 trillion allotted at last Wednesday’s auction. The tighter cash conditions pushed the Overnight Rate (OVN) up by 10 basis points to 27.00%, while the Open Repo Rate (OPR) was unchanged at 26.50%.
Following last week’s Treasury bills auction, market players booked profits on earlier gains, with sentiment turning mixed as investors reassessed yield levels and trading opportunities, TrustBanc Financial Group Limited noted.
On Monday, asset managers increased holdings in anticipation of a possible lull in primary market issuance this week. Demand was strong across the curve, with the NOV-25 maturities seeing the most notable yield drop, driving a 3-basis-point decline in the average yield to 17.88%.
By segment, average yields fell 7 bps each at the short and mid ends, led by a sharp contraction in the 87-day (-37 bps) and 101-day (-73 bps) maturities. The long end of the curve was unchanged.
In the OMO bills market, bargain hunting spurred a 9-basis-point drop in average yields to 24.50%, despite last week’s sizeable ₦2.12 trillion allotment at the primary auction.
