A day after the Central Bank of Nigeria (CBN) repriced the 364-day bill to 21.45% throughout the week, the average yield on Nigerian Treasury bills in the secondary market fell to 18.3%. Investors in the secondary market sold off their naira assets after the rates repricing at the main market auction.
Many fixed income experts at Broadstreet continued to believe that the tightening of monetary policy will keep yields high in the first half of 2024, based on their short-term outlooks. The banking system’s liquidity level deteriorated on Wednesday as a result of the significant Treasury bill auction sales. In the money market, short-term benchmark interest rates have gone crazy and crossed the red line.
The FMDQ platform’s statistics, which showed money market rates, indicated that the overnight lending rate increased by 111 basis points to 31.6%, following the debits for the net NTB issuance worth N979.79 billion, according to Cordros Capital Limited.
The open repo rate closed at 31.08% as funding pressures drove the interbank rate upward while banks scrambled for funding. This spike was attributed to the recent efforts by the CBN to mop up excess liquidity through Open Market Operations (OMO) and Nigerian Treasury Bills (NT-bills) auctions, resulting in rising yields.
At the secondary market for Nigerian Treasury bills trading, the average yield expanded by 73 basis points to 18.3%, fixed income analysts at Cordros Capital Limited stated in an email shared with clients.
Traders reported that across the curve, the average yield advanced at the short (+18bps), mid (+120bps) and long (+83bps) segments.
The surge in yield curve followed sell pressures on the 91-day to maturity which gained +132bps, yield on 154-day to maturity rose by 203bps as investors offloaded the assets. Also, the yield on 259 day to maturity advanced by 144bps due to bearish trade on the asset.
Elsewhere, the average yield declined by 10bps to 18.9% in the OMO bills segment in the secondary market on Thursday, after primary market auction sales which target foreign investors.
