The average yield on Nigerian Treasury bills increased by 83 basis points week on week to 23.2% in the secondary market, owing to sell pressure on naira assets.
The market witnessed sell pressure ahead of auction sales and the September inflation data, which is slated to be announced this week. After two months of deceleration, the disinflationary situation has continued to face dangers that could reverse the trend. Spot rates on government borrowing instruments have risen in response to the benchmark interest rate increases, albeit gradually.
However, the market consensus on the path of inflation rates has begun to differ as the price of petroleum goods has increased. This has required investors to continue to alter their portfolio composition in order to optimise returns. Real return on investors is currently having a narrow gap of 4.9% after interest rate was adjusted to 27.25% to combat 32.15% inflation rate.
Last week, fixed income market traded negatively due to weak sentiment. Across the market segments, the average yield advanced by 42 basis points to 23.1% in the Treasury bills segment, according to Cordros Capital Limited
Fixed-interest securities analysts also noted that average yield increased by 192 basis points to 25.7% in the OMO bills segment.
In its note, Afrinvest Capital Limited stated that Treasury bills market performance was bearish as average yield across benchmark tenors trended higher, up 83 basis points week on week to close at 23.2%.
Across tenors, the long-term instrument recorded the most selloffs as yield rose 133 basis points week on week to 23.6%. Trailing, the medium and short-term instruments inched higher by 96bps and 21bps w/w, respectively, to 24.2% and 21.9%.
In the new week, the CBN would conduct an OMO auction to rein in part of the inflows; hence, analysts said they expect system liquidity to temper. On this backdrop, yield on naira asset is projected to trend higher in the secondary T-bills market.
