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Treasury Bills Yields Crash to 11.22% on 0.76% Loss

By Dipo Olowookere

The continued absence of OMO sales by the Central Bank of Nigeria (CBN) has reduced the average yields of treasury bills at the secondary market on Monday.

Business Post reports that during yesterday’s trading session, yields crashed across the maturities with the short end of the curve suffering the heaviest loss.

At the close of transactions on Monday, the average yields went down by 0.76 percent to settle at 11.22 percent.

An analysis of the treasury bills yields showed that the one-month bill dropped 1.05 percent to close at 10.08 percent. The 3-month instrument went down yesterday by 0.43 percent to finish at 10.18 percent, the 6-month tenor declined by 0.68 percent to close at 11.81 percent, while the 12-month maturity decreased by 0.89 percent to end at 12.81 percent.

According to analysts at Cowry Asset, the lack of an OMO auction is responsible for the huge buying interests around the mid tenured instruments, which were aggravated by the sizeable amount of system liquidity.

They said the Sovereign yield curve has consequently normalized fully and might be a precursor for a further cut in the MPR at this MPC meeting or the next.

“We are however on the lookout for further guidance from the CBN as it continues its struggle with high inflation and the stability of the exchange rate, whilst also looking to fuel some growth within the domestic economy, which recently witnessed a slowdown from the previous quarter,” they said.

Meanwhile, rates in the money market inched marginally higher yesterday by as banks funded for the CBN’s weekly wholesale FX sale.

As a result, the Open Buy Back (OBB) and Overnight (OVN) rates ended the session at 5.00 percent and 5.71 percent respectively, with system liquidity currently estimated at N180 billion positive.

The rates are expected to remain relatively stable, barring a renewed OMO sale by the central bank.

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan.

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