The average yield on Nigerian Treasury notes decreased somewhat to 25% in the secondary market ahead of the Central Bank of Nigeria’s (CBN) midweek primary market auction.
The decline in the benchmark yield on Treasury notes is a result of modest purchasing interest seen in the fixed income market, which has reversed earlier selloffs that supported the yield curve’s sharp rise last week.
Amidst strains on liquidity in the banking sector, the market witnessed a resurgence of purchasing activity before to the primary market auction. There were large selloffs of Treasury notes last week, even though deposit money institutions raised N1 trillion through the CBN standing lending facility window. Weekly yield climbed by almost 6% to maintain a level above 25% in comparison to the yearly inflation rate of 33.20%.
In the fixed income market yesterday, with tight liquidity, investors ramped up Treasury bills across the short, belly and the long end of the curve as risk off sentiment eased moderately.
As a result, the average yield declined by 3bps to 25.2%. Across the curve, the average yield contracted at the short (-5bps), mid (-5bps) and long (-1bp) segments.
The yields contraction across the lines were triggered by fixed income securities investors demand for 31-day to maturity bill, causing its associated yield to slump by -6bps.
The market also saw demand for 157-day to maturity, causing its yield to fall by -5bps and increase interest in 325-day to maturity dragged its yield lower by -5bps) bills. Similarly, the average yield dipped by 3bps to 18.4% in the OMO segment.
In the money market, key money market rates such as the open repo rate (OPR) and overnight lending rate (OVN) increased by 0.50% and 0.71%, to close at 29.89% and 30.96%, respectively
