Yield on T-Bills Steadies After Higher Spot Rates Offer
Trading activities in the Nigerian Treasury bills secondary market were quiet, as the average yield remained at 8.0%. Similarly, the average yield was unchanged at 13.3% in the OMO bills segment.
Spot rates on Nigerian Treasury bills rose at the primary market auction conducted by the debt office on behalf of the Central Bank (CBN) amidst an expectation of a rise in headline inflation reading for August.
The apex bank primary market auction saw a surge in demand from investors amidst market pressures driven by an expectation that inflation would surge and sizeable liquidity in the financial system.
Specifically, the stop rate for 91-day treasury bills rose by 200 basis points to 6.50%. Also, rates for 364-day bills jumped higher to 12.98% up by 57 basis points above the previous auction offer. On the other hand, the marginal rate for the 182-day bill was unchanged at 7.00%, according to asset managers at Cowry Asset Management Limited.
The bid-to-cover ratio improved to 4.23 times, which was an improvement when compared with 4.08 times reported at the previous auction Due to tepid trading activities in the secondary market, the average secondary market yield on T-bills closed unchanged at 7.98%.
In the money market, funding rates such as the open repo rate (OPR) edged higher by 75 basis points to 23.50% and the overnight lending rate (OVN) rose to 23.75% from 23.70%.
In the bond market, the values of FGN bonds were bullish for the majority of maturities tracked, according to asset managers. However, the market recorded selloffs across short-term papers. Particularly the Mar 25 and Jan 26 debt papers were offloaded in the secondary market.
The bearish outing led to a 10-bps expansion in the average secondary market to 13.93%. Notably, the 10-year and 20-year borrowing costs yielded around 14.58% from 14.61% and 15.42% from 15.49%, respectively, Cowry Asset Management told investors in an update.
On the flipside, the 30-year FGN bonds yield inched higher by 2 basis points to 15.83%. Across the benchmark curve, Cordros Capital said the average yield expanded at the short (+33bps) end as market participants sold off the MAR-2025 (+153bps) bond.
Yield curve however contracted at the mid (-2bps) and long (-1bp) segments following bargain hunting for the APR-2029 (-4bps) and APR-2037 (-7bps) bonds, respectively. Elsewhere, FGN Eurobonds were bullish for all maturities tracked, with the average secondary market yield closing lower at 11.24%. Naira Devaluation Deepens Economic Crisis in Nigeria