The selling rallies ahead of the Central Bank of Nigeria’s (CBN) midweek auction to refinance maturing bills worth more than N303 billion were reversed as the average yield on Nigerian Treasury Bills (NTB) jerked downward.
On Monday, when local deposit money banks rekindled their interest in the CBN’s standing lending facility to maintain their financing profile, rising liquidity concerns precipitated selloffs. Analysts claim that the majority of the selloffs occurred at the long and belly ends of the curve amid expectations that spot rates on bills refinancing would decrease.
However, given that bondholders were uninterested in the Debt Management Office main market auction sales, a change in liquidity levels is anticipated to push spot rates higher at the auction. If not for the apex bank, the demand level might be repeated.
The money market experienced an uptick in Nigerian Interbank Offered (NIBOR) rates on Tuesday across all tenor ranges, according to a report from Cowry Asset Management.
According to Cordros Capital, participants demanded the 65-day bill, which lost 293bps, while the average yield fell at the short end of the curve (-73bps).
The selloff of the 338 day to maturity (+79bps) bill led to an increase in yield at the long end (+6bps). On the other hand, the mid-segment’s average yield remained unchanged. The OMO segment’s average yield remained constant at 11.2% in other areas.
The investment company said that the three-month NIBOR rate rose by 19 basis points to 13.50%. Important money market rates, such as the open repo rate and the overnight lending rate, ticked upwards as pressures mounted on liquidity.
The repo rate surged 130 basis points to 23.80%. Also, the overnight lending rate rose to 140 basis points 24.70%. Ahead of CBN auction sales on Wednesday, the average secondary market yield on Treasury bills moderated to 8.28%.
