Yield on T-Bills Declines as Investors Go Short
The average yield on Nigerian Treasury Bills declines further mid-week as investors go short, selling off long-dated fixed income instruments amidst robust financial system liquidity.
Better liquidity in the financial system continues to drag short term rates downward as pressure on interbank rate moderates, though still in a double-digit region. In the money market today, data from FMDQ Exchange shows that the average interbank rate dropped by 5 basis points to close at 14.83bper cent.
Alpha Morgan Capital said Open Buy Back rate (OBB) remained flat while the Overnight lending rate (OVN) dropped by 10 basis points to close at 14.50bper cent and 15.15bper cent, respectively.
Driving a similar narrative, analysts at Cordros Capital attributed the slowdown short term rates to the absence of any significant funding pressures on the system.
Following a bearish performance in the equity market, activities at the Nigerian Treasury bills secondary market traded on a quiet to bullish note yet again in today’s session.
There were slight drops of 1bps and 3 basis points at the short and mid ends of the curve while the long end of the curve remained flat. Consequently, the average yield dropped by 2 basis points to close at 5.48bper cent.
The outcome was driven by investors’ demand for the 92 days to maturity (-12bps) and 106 days to maturity (-9bps) bills, respectively.
Elsewhere, the average yield expanded by 1 basis point at the open market operations (OMO) segment to 6.4bper cent.
For bondholders, activities at the FGN bond secondary market was somewhat bullish following contractions of 4 and 6 basis points at the short and mid ends of the curve, according to Alpha Morgan Capital.
Meanwhile, analysts stated that the long end of the curve remained flat. As a result, the average yield dropped by 3 basis points to close at 11.40 per cent.
Across the benchmark curve, Cordros Capital analysts said the average yield expanded at the long (+2bps) end as investors sold off the APR-2037 (+12bps) bond; but contracted at the short (-2bps) and mid (-7bps) segments following demand for the JAN-2022 (-10bps) and APR-2029 (-13bps) bonds, respectively.
Elsewhere, Nigerian Interbank Offered Rate Fixing (NIBOR) moderated for most tenor buckets tracked on sustained financial system liquidity ease. Also, Nigerian interbank treasury bills true yield fixing (NITTY) fell for most maturities tracked as traders await NTB auction results.
However, the value of FGN Eurobond increased for most maturities amid sustained buy pressure. In sum, the average yield climbed slightly by 1 basis point to close at 6.51 per cent. #Yield on T-Bills Declines as Investors Go Short
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