Prior to tomorrow’s scheduled primary market auction, investors in the fixed interest securities market sold their Treasury bills in the secondary market. Because of the decreased interest rate on bills at the short and belly of the curve, the secondary market for Nigerian borrowing instruments closed on a negative note.
Because of the limited liquidity in the financial system, banks were observed to sell off their investments in government assets. However, banks choose to borrow from the central bank’s standing lending facility on Tuesday, which resulted in a minor alleviation of liquidity pressure.
Liquidity in the opening system was still negative. However, the Overnight Rate (O/N) dropped by 25 bps to 32.28% and the Open Repo Rate (OPR) fell by 39 bps to 31.67%.
Other authorised traders also adjusted their portfolios ahead of inflation data. Most analysts have expressed views that the nation’s economic health may not be able to accept another interest rate hike as growth slowed down in the first quarter due to multi-faceted issues.
According to fixed income analysts, most of the selling interest in the T-bills market were focused on the long end of the curve. As a result, the average mid-rate rose by 32bps to 21.75%., according to AIICO Capital Limited.
In its note, Cordros Capital Limited said the average yield declined in the short (-3 bps) and mid (-4 bps) segments. Analysts said the yield contraction was driven by buying interest in the 80-day to maturity (-3bps) and 171-day to maturity (-4bps) bills, respectively.
Meanwhile, the average yield expanded at the long (+28 bps) end due to profit-taking activities on the 248-day to maturity (+108 bps) bill. In the OMO segment, the average yield contracted by 5 basis points to 24.3%.
