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The Nigerian Treasury bills (NTB) market recorded a cold outturn again as local deposit money banks, asset/fund managers, and other market players shifted their attention to the midweek auction by the Central Bank of Nigeria (CBN).
Consequently, the average on treasury bills instruments remained unchanged after a persistent decline. The NTB yield curve has been sloping downward as buying temperature in the secondary market dropped.
Banks have been maintaining balance over the week as liquidity levels in the market remain solid.
The CBN will offer market participants an opportunity to subscribe to the Nigerian Treasury bill to raise more than N180 billion in the primary market auction planned for Wednesday (June 7, 2023).
According to traders, the liquidity level in the financial system will affect investors’ demand or subscription as market participants await catalysts that will drive yield repricing following benchmark interest rate adjustment, and rising inflation.
A double-digit high inflation rate has reduced real return on investment in naira assets and return. The fixed income market assets remain exposed to inflation rate movement.
According to market analysts, financial system liquidity inched lower by 2.7% to close at ₦370.70 billion. The robust liquidity level caused interbank rates to close flat. The overnight lending rate was unchanged at 12.0%, as the system liquidity closed in a net long position. The open repo rate was unchanged at 11.63%.
At the Nigerian Treasury bills segment, trading activity was mixed as market participants stayed on the sideline in anticipation of Wednesday’s auction results. The market records thin transaction that has no weight to shift the yield curve.
Thus, the average secondary market yield on T-bills closed flat at 6.35%.
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