Because wealth managers, fixed interest securities dealers, and other authorized dealers sold off a portion of their naira holdings for cash, the average yield on Nigerian Treasury notes increased to 15.2%.
As a result, the yield spiked immediately following selloffs prompted by the Central Bank of Nigeria’s (CBN) adjusted Treasury bill auction sales the previous week. Separate investment banking organizations report that Thursday’s secondary market trading activity on Treasury notes finished on a negative note.
According to a notice sent via email to investors, Cordros Capital Limited, the average yield increased by 8 basis points to 15.2%. In its update, the company stated that the average yield rose in the short (+76bps) and mid (+10bps) segments across the curve.
The yield surge occurred following sell pressures on the 57-day to maturity and 99-day to maturity bills, respectively. These short-dated Treasury bills recorded 190 and 99 basis points increases in their associated yield.
Conversely, the average yield contracted at the long (-32bps) end as investors demanded the 204-day to maturity with yield down by 97 basis points bill.
Meanwhile, the average yield pared by 1bp at 17.8% in the OMO bills segment, traders said in a note. The market is expecting inflation report for January to be posted today. Broadstreet analysts’ consensus estimates further uptick following the devaluation of the naira. Headline inflation printed at 28.92% in Dec, 2023.
Last week, the average NTB yield increased by +570 basis points to close at 15.4% due to sell-offs induced by the CBN’s revised Treasury bills auction offer.
At the primary market auction held last week Wednesday, the CBN offered and allotted N1 trillion worth of NTBs to market participants.
The stop rates increased across the three tenors; 91-day bills attracted 17.24% from 5.00%, the spot rate on 182-day bills grew to 18.00% from 7.15% and 364-day was allotted at 19.00% from 11.54%.
The average yield for OMO bills increased by +830bps to close at 17.9%, according to traders, adding that this was partly attributed to higher yields at the primary market NTB auction.
In the money market, the interbank rate increased by 0.19% to close at 16.25%. However, key money market rates, such as the open repo rate (OPR) and overnight lending rate (OVN) nosedived to 14.79% and 15.46%, respectively.
