One-Month T-Bills Yield Drops to 10.51% After 0.69% Loss

By Dipo Olowookere

The average treasury bills yield at the secondary market on Wednesday dropped 0.23 percent to close at 12.92 percent. This occurred a day after the Central Bank of Nigeria (CBN) reduced the benchmark interest rate to 13.50 percent from 14 percent.

Business Post reports that yield depreciated across the maturities with the exception of the 6-month paper, which rose by 0.36 percent to finish at 14.06 percent.

The one-month bill lost 0.69 percent to close at 10.51 percent, the 3-month bill declined by 0.43 percent to finish at 11.26 percent, the 9-month maturity shed 0.26 percent to settle at 14.31 percent, while the 12-month tenor fell by 0.16 percent to close at 14.48 percent.

For the third consecutive day, the apex bank did not sell OMO bills to investors, but one is anticipated on Thursday.

However, that did not stop the demand of treasury bills at the secondary market with the mid tenor catching the attention of market players.

At the market on Thursday, system liquidity remained relatively tight, with expectation for further debits and funding pressures.

“We expect the market to trade in reaction to the possibility of an OMO issuance by the CBN. The market should trade slightly bearish if the CBN announces a renewed OMO auction with the one-year bill still offer, whilst yields should compress lower if otherwise,” Zedcrest Research stated.

Meanwhile, the average money market rate settled lower on Wednesday by 1.54 percent to 15.32 percent on the back of the 1.29 percent and 1.79 percent declines registered by the Open Buy Back (OBB) and Overnight (OVN) rates respectively.

The OBB rate dropped to 15.14 percent from 16.43 percent, while the OVN rate depreciated to 15.50 percent from 17.29 percent.