Treasury Bills Buying Drags Yield Downward
The increased demand for Nigerian Treasury bills in the secondary market dragged yields downward further. Despite biting inflation, investors continue to ramp up short terms bills in the fixed income market. Real return on investment widened with inflation rate popping up to 33.20%.
In the money market, short term benchmark interest rates adjusted upward as liquidity pressures persisted. Past auctions sales dragged liquidity level in the financial system lower, forcing local deposit money banks to pitch tents at the central bank standing lending facility.
According to information obtained from FMDQ securities, corroborated by investment banking firm, Cowry Asset Management Limited, key money market rates like the open repo rate (OPR) and overnight lending rate (OVN) surged to conclude at 30.39% and 31.36%, respectively.
Interbank rates adjusted higher despite N17 billion inflow from matured OMO bills.
With the buying momentum on Nigerian treasury bills, the average yield contracted by a basis points to 18.8% yesterday, according to Cordros Capital Limited.
The investment banking firm told clients via email that across the curve, the average yield pared at short (-1bp), mid (-1bp) and long (-1bp) segments. The yield contraction followed buying interests in the 86-day to maturity (DTM) which shed 1bp,163DTM (-1bp) and 345DTM (-1bp) bills, respectively.
Similarly, the average yield declined by 1bp to 18.2% in the OMO segment in the secondary market at the same time.
