Appetite for Debt Instruments Increases, T-bills Yields Slide

FG Borrows
  • Appetite for Debt Instruments Increases, T-bills Yields Slide

The secondary market for Treasury bills was characterised by buying pressure, as the average T-bills yield declined by 0.37 per cent, to settle at 14.51 per cent. The yields on all instruments witnessed declines, save for the one-month tenor which advanced by 0.33 per cent.

The average money market rate declined by 0.13 per cent on Wednesday to settle at 4.96 per cent. The overnight rate declined by 0.33 per cent, while the open buy-back rate advanced by 0.08 per cent, to close at 5.17 per cent and 4.75 per cent, respectively.

Similarly, bullish sentiments prevailed in the Treasury bonds space, as the average bond yield settled at 14.01 per cent. Yield declines were recorded on all instruments, save for the May 2018 instrument, which advanced by 0.04 per cent. Consequently, the average yield declined by 0.08 per cent.

The naira depreciated by 0.15 per cent against the United States dollar in the interbank foreign exchange market, to settle at 305.95. However, the currency remained unchanged in the parallel FX market.

On Tuesday, however, bearish sentiments had prevailed in the secondary market for Treasury bills, as yields on all tenors advanced, bringing the average T-bills yield to 14.88 per cent.

“We attribute the weak demand in the secondary market for T-bills to investors’ preparation ahead of Wednesday’s Primary Market Auction,” analysts at Meristem Securities had said in a post.

At the close of trades, the open buy-back and overnight rates advanced by 0.84 per cent and one per cent apiece. Consequently, the average money market rate settled at 5.09 per cent.

The Central Bank of Nigeria had announced that it would hold a T-Bills Primary Market Auction on January 3, 2018. T-Bills worth N127.61bn matured on Wednesday, while a total amount of N148.86bn was issued in 91-day, 182-day and 364-day instruments.

In the Treasury bonds space on Tuesday, 11 instruments witnessed yield declines, while the yield on three tenors advanced. Despite the significant number of instruments that recorded yield declines, the average bond yield advanced marginally by 0.02 per cent, to settle at 14.09 per cent.

About the Author

Samed Olukoya
CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade long experience in the global financial market. Contact Samed on Twitter: @sameolukoya; Email: [email protected]

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