Panic Buying As Investors Pump Funds Into Treasury Bills

LBS Discloses FG's Targets With Naira Redesigning

The average yield on Nigerian Treasury notes stabilized in the secondary market as investors moved their focus to primary market auction sales. Despite the auction sales, the secondary market saw strong purchasing demand across the short, belly, and end of the curve.

Lost bids in the auction appeared to seep through the secondary market, as investors sought alpha throughout Nigeria’s financial markets despite severe inflation circumstances.

The surge in demand for naira assets in the market was fueled by increased liquidity in the financial system, inflows from matured instruments, and banks’ continued borrowing from the central bank’s standing lending facilities.

The short term benchmark interest rates declined, suggesting that liquidity pressures experienced in the recent past eased. On the other hand, the interbank borrowing rate saw a significant uptick of 118 percentage points, reaching 32.14%, Cowry Asset Limited said in its note.

Key money market rates, such as the open repo rate (OPR) and overnight lending rate (OVN), also witnessed southward shifts to 29.94% and 30.66%, as the demand for funds eased. Fixed interest securities analysts said the secondary market for Nigerian Treasury Bills was moderately active and bullish, with predominant buy sentiments across the curve.

Cordros Capital Limited stated specifically in its note to investors that the average yield declined at the short (-1bp), mid (-1bp) and long (-1bp) segments. The contraction followed demand for the 50 day to maturity whose yield dropped by -2bps.

There was buying interest in 169-day to maturity, causing its yield to pared by a basis points. At the end of the curve, investors parked cash into 337-day to maturity, dragging its yield down by 2bps. Similarly, the average yield contracted by 1bp to 20.9% in the OMO bills segment in the secondary market, traders said in the note.

Overall, the buying momentum caused a basis point decrease in the average T-bills yield to 20.91%. Elsewhere, yield remained subdued in secondary market. Trading activity on Federal Government of Nigeria (FGN) Bond ended on a calm note as real return on assets widened.

Investors divested from the MAR-25 and MAY-33 bonds, resulting in their yields rising by 2 basis points each. Despite this, the average secondary market yield remained unchanged from the previous day’s close of 18.69%. 

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