Treasury Bills Buying Pulls Yield Downward

LBS Discloses FG's Targets With Naira Redesigning

Yields were further pressured lower by the secondary market’s increasing demand for Nigerian Treasury notes. Investors in the fixed income market are still buying more short-term bills despite the painful inflation. The inflation rate increased to 33.20%, widening the real return on investment.

As long as there was continued demand on liquidity, short-term benchmark interest rates in the money market rose. Previous auction sales caused the financial system’s liquidity level to drop, which prompted regional deposit money institutions to set up shop at the central bank’s standing lending facility.

The investment banking company Cowry Asset Management Limited confirmed the information gleaned from FMDQ securities that showed significant increases in important money market rates such as the overnight lending rate (OVN) and open repo rate (OPR), which ended at 31.36% and 30.39%, respectively.

Interbank rates adjusted higher despite N17 billion inflow from matured OMO bills. With the buying momentum on Nigerian treasury bills, the average yield contracted by a basis points to 18.8% yesterday, according to Cordros Capital Limited.

The investment banking firm told clients via email that across the curve, the average yield pared at short (-1bp), mid (-1bp) and long (-1bp) segments. The yield contraction followed buying interests in the 86-day to maturity (DTM) which shed 1bp,163DTM (-1bp) and 345DTM (-1bp) bills, respectively.

Similarly, the average yield declined by 1bp to 18.2% in the OMO segment in the secondary market at the same time.

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