Yield Dips as Appetite for Long-dated T-Bills Rises
The average yield in the secondary market dips on Thursday as Investors appetite for longer duration Treasury bills rises after quiet activities on Wednesday. Following improved financial system liquidity, short term rates in the money market caved in again.
Data from the FMDQ Exchange platform shows that the average interbank rate dropped by 50 basis points to end the day at 12.75% following contractions in both the Open Buy Back and overnight lending rates.
The money market records 50 basis points decline in open buyback and a simultaneous 50 basis points decline in overnight lending rate to close at 13.00% and 13.50%, respectively.
According to fixed income market analysts at Alpha Morgan Capital, activities at the Nigerian Treasury Bills secondary market traded on a calm note in today’s session.
Consequently, the average yield declined slightly by 1 basis point to close at 5.36%. Analysts at Cordros Capital hinted that the decline came following demand for the 338 days to maturity bills which resulted in a 14 basis points slowdown.
It had ended at 5.37% on Wednesday amidst a slowdown in the fixed income market. Yields repricing has been largely on the negative side since headline inflation started a downward movement in April.
For October 2021 reading, consensus analysts’ expectations have been that the consumer price index that measures the rate of changes in inflation would further decline for the sixth month.
Amidst a plan to issue N250 billion Sukuk for infrastructural development in the latter part of the year, Debt Management Office has kept up with efforts to reduce the Federal Government of Nigeria debt service costs.
Today, Alpha Morgan Capital said in a report that activity at the FGN bond secondary market was bearish as the short, mid and long tenors expanded by 11, 2 and 2 basis points, respectively. As a result of the bearish mood, the average yield climbed by 3 basis points to close at 11.27%.
In the secondary market for Federal Government bonds, participants sold off the MAR-2024 (+33bps) and APR-2037 (+5bps) bonds, respectively; the mid-segment was unchanged.
Similarly, the average yield contracted slightly by 1 basis point at the open market operations (OMO) segment to 6.1%.
Meanwhile, trading activities at the Eurobond market was somewhat mixed as the average yield dropped by 3 basis points to close at 6.70%, compared with an uptick recorded on Wednesday.
Nigeria local currency, naira however depreciated by 0.07% against the United States dollar at the Investors and Exporters foreign exchange window to close at N415.10, according to data from FMDQ Exchange. #Yield Dips as Appetite for Long-dated T-Bills Rises
Read Also: Spot Rate on Long-dated Treasury Bills Rises as Naira Falls
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