The average yield on Nigerian Treasury bills (NTB) rose moderately to 7% as cash tasty deposit money banks (DMBs), fund, and asset managers offloaded their holdings to support liquidity requirements.
Market data indicates that the liquidity level in the financial system has dropped, pushing funding rates in the absence of stronger inflows from maturing instruments. The Central Bank of Nigeria (CBN) failed to refinance the matured OMO bills worth N10 billion.
Data from FMDQ Exchange show that short-term benchmark rates increased amid expectations that the monetary policy committee will hike interest rates in the new week. The overnight lending rate increased by 300 basis points to 15.6%.
Last week, the financial system was debited for May, 2023 Federal Government of Nigeria (FGN) bond auction worth N368.15 billion, which outweighed the N10 billion inflow from open market operations (OMO) maturities.
As a result, the average system liquidity settled lower at a net short position of N29.89 billion versus a net long position of N660.01 billion in the previous week, according to Cordros Capital market brief.
Activities in the Treasury bills secondary market turned bearish this week, as local investors looked to raise funds, triggered by the depressed system liquidity in the market.
As a result, the average yield across the market expanded by 33 basis points to 7.0%. This week, T-bills worth N180.45 billion will be auctioned by CBN via the primary market; viz: 91-day bills worth N9.96 billion, 182-day bills worth N1.82 billion, and 364-day bills worth N168.67 billion.
“We envisage lower yields … with system liquidity expected to be buoyant”, analysts said. The market expects liquidity in the system to improve over expected inflows from FAAC allocation worth N407.13 billion and FGN bond coupon payments totaled N17.87 billion. #Nigerian Treasury Bills Yield Rises to 7%
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