The average yield on Nigerian Treasury bills settled at 4.34% in the secondary market with increasing liquidity pressure in the financial system.
Coupled with the downward spot rates repricing trend despite Nigeria’s high inflation rate, the real return on naira assets has stayed in the negative region.
Market data shows that short-term benchmark rates rose sharply due to a massive drop in liquidity profile following debit for the Debt Management Office primary market bond auction conducted on Monday.
NewsBeatng reports that the financial system liquidity closed at a net short position of N235.16 billion – a strong reversal from the previous position when short-term rates were below 2%.
Money market benchmark pricing: The open repo rate ballooned 975 basis points to 21.00% from 11.25% midweek and the overnight lending rate jumped 962 basis points to 21.92%.
Meanwhile, the Nigerian Interbank Treasury Bills True Yield moderated for most maturities tracked due to buying pressure from traders seeking lower yields, according to Cowry Asset Management market update.
Notably, the average secondary market yield on T-bills closed at 4.34%. In the bond market, the value of FGN bonds rose for most maturities tracked by fixed income market analysts and traders.
Cowry Asset analysts said short and mid-dated bonds showed gains, with the 21 JUN 2053 paper performing particularly well, resulting in a 2-basis-point increase in the average secondary market yield to 12.25%.
The 10-year borrowing cost yielded around 12.89%, the investment firm said in its update, while the 20-year FGN note was around 14.48%, and the 30-year FGN Bond remained steady at 14.12%.
Elsewhere, FGN Eurobonds depreciated across most tracked tenors amid sustained bearish sentiment, expanding the average secondary market yield to 10.46% from 10.36% recorded midweek.
Cordros Capital Limited told investors in an email that across the benchmark curve, the average yield dipped at the mid (-9bps) and long (-3bps) segments as investors demanded the APR-2032 (-15bps) and JUN-2053 (-31bps) bonds, respectively. Elsewhere, the average yield closed flat at the short end.
