Nigerian Treasury Bills Yield Dips to 21.8%

The average yield on Nigerian Treasury bills dipped by seven basis points on Wednesday in the secondary market to 21.8%, traders said in their separate update on fixed interest securities market.

Yield on Nigerian bills contrast as investors continue to park cash in naira assets to reduce inflation pressure amidst high interest rate environment.

Recent primary market auction conducted by the Central Bank of Nigeria suggest that rates have peaked. Spot rates on Treasury bills sales at the main market has started downward decline. The spot rates reduction has now cut across tenor instrument despite high interest, inflation conditions in the market.

Rates cut was possible due to strong demand for Nigerian Treasury bills at various primary market auctions conducted by the CBN.

The monetary authority had used higher spot rates on one year Treasury bills to attract foreign investors into the economy. However, the authority has started scaling back on rates, thus reducing balance sheet funding costs.

In the secondary market on Wednesday, the Treasury bills secondary market traded with bullish sentiments again as anticipated after inflation climbed to 33.95% in May, 2024. As a results of buying momentum, the average yield contracted by 7bps to 21.8%.

Cordros Capital Limited told investors via email that the average yield dipped at the short (-5bps), mid (-6bps) and long (-8 bps) segments. Analysts attributed the contraction yield to buying interest in the 8-day to maturity bill, whose yield dipped by -6bps.

The market also show interest in 176-day to maturity, causing its yield to dip by -6bps, while demand for 337-day to maturity dragged its yield down by 9bps. Elsewhere, the average yield declined by 7bps to 21.7% in the OMO bills segment in the secondary market.

In the money market, short term benchmark interest rates adjusted to liquidity fluctuation. At the close of business, the overnight lending rate expanded by 89 bps to 27.1%, in the absence of inflows. #Nigerian Treasury Bills Yield Dips to 21.8%

Interest Rate on OMO Bills Sinks to 22.30%
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