By 
The average yield on Nigerian Treasury bills decreased in the secondary market ahead of the June inflation report release. Market expectations indicate a slowdown in the inflation rate due to base effects.
Investors and authorized dealers showed increased buying interest in the fixed income market following the Central Bank of Nigeria (CBN) auction on Wednesday. This surge in the Treasury bills market was driven by investors looking to recover lost bids from the primary market auction amidst expectations of yield repricing.
Despite the liquidity level in the financial market remaining tight, short-term benchmark interest rates saw a decline, according to data from the FMDQ platform.
System liquidity opened low as banks continued to borrow from the CBN’s standing lending facility for funding. However, the open repo rate eased by 35 basis points (bps) to 31.75%, while the overnight rate decreased by 16 bps to 32.60%.
The average yield declined across the short (-59 bps), mid (-1 bps), and long (-2 bps) segments, primarily due to high demand for the 63-day maturity bills, which caused the yield on short-dated instruments to dip by 346 bps. Additionally, the market saw buying interest in the mid-segment, with the 147-day maturity bill’s yield declining by 2 bps.
At the long end, there was notable demand for the 350-day maturity bill, resulting in a 2 bps drop in its yield. Similarly, the average yield in the Open Market Operations (OMO) segment of the secondary market dipped by 2 basis points to 24.3%.
Comments