In the secondary market, the average yield on Nigerian Treasury Bills declined as a result of rising demand and expectations of an interest rate hike. Interest rates are expected to be raised by the central bank in an effort to control Nigeria’s deplorable inflation rate, which was documented at 31.70% in February.
According to analysts, the quantity of liquidity available in the financial system drove demand for Treasury bills while the market waited for triggers to drive more yield repricing. On Wednesday, the central bank is anticipated to hold a main market auction.
It is anticipated that market participants looking to store money in short-term borrowing instruments would attend the auction. The apex bank received substantially less in the recent auction sales than in the overall amount of subscriptions.
The buying momentum that resulted from the dynamics of the investment environment caused a slight decline in the average yield, which ultimately settled at 17.7%. In its market update, Cordros Capital Limited told investors that across the curve, the average yield contracted at the short (-2bps), mid (-2bps) and long (-3bps) segments.
The decline was caused by demand for the 73-day to maturity (-2bps), 171-day to maturity (-3bps) and 332-day to maturity (-4bps) bills, respectively. The firm reported that similarly, the average yield dipped by 3bps to 18.5% in the OMO bill segment in the secondary market.
In the money market, the overnight lending rate contracted by 84 basis points to 26.5%, following inflows from FGN bond coupon payments worth N124.11 billion.
Interbank rates including the open repo rate (OPR) and overnight lending rate (OVN), nosedived to conclude at 26.22% and 27.29%, respectively.
