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Bond Yield Rises, T-Bills Sees Buying Interest as Naira Falls
The Nigerian Treasury bills secondary market experienced a buying interest after the Central Bank of Nigeria’s stronger-than-expected hawkish tone spurred the benchmark interest rate to 15.5% as inflation worries grow.
In the money market, short-term rates moderated on Thursday while bondholders in the secondary market for trading Federal Government of Nigeria’s debt instruments were in a selling mood.
Traders’ selloffs across tenored fixed securities instruments pumped average yields higher while the Nigerian naira falls, crossing N437 first time since 2017 when CBN launched the Investors and Exporters foreign exchange market.
Results of transactions conducted at the money market indicate that the overnight lending rate contracted by 33 basis points to 16.5%, in the absence of significant funding pressure on the financial system’s liquidity.
Market data from the FMDQ Exchange platform indicated that the Nigerian local currency, the naira, depreciated by about 0.2% to N437.03 at the official window as demand sparked. In the parallel market, Naira was sold at N732 to a United States dollar as the 2023 election campaigns began. READ:FGN Bond Yield Nears 13% over Sell Pressure
In a market note, Cordros Capital stated that trading in the Nigerian Treasury bills secondary market was bullish –indicating investors were in buying mood – thus causing the average yield to drop 27 basis points to 7.1%.
Across the curve, traders said the average yield contracted at the short (-167bps) and mid (-94bps) segments following interests in the 56-day to maturity (-538bps) and 133DTM (-360bps) bills, respectively.
The average yield expanded at the long (+163bps) end as investors sold off the 350-day to maturity (+903bps) bill. Elsewhere, the average yield was unchanged at 10.3% in the OMO bills segment.
In the FGN bond segment, trading activities in the secondary market ended with bearish sentiments, as the average yield expanded by 12 basis points to 13.1%.
Across the benchmark curve, Cordros Capital stated that the average yield expanded at the short (+25bps), mid (+7bps), and long (+4bps) segments due to selloffs of the APR-2023 (+149bps), APR-2032 (+14bps), and JUL-2034 (+25bps) bonds, respectively.
# Bond Yield Rises, T-Bills Sees Buying Interest as Naira Falls#
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