T-Bills Yields Fall as Investors Readjust to CBN Directive

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By Dipo Olowookere

The average yields of treasury bills at the secondary market in Nigeria went down on the first trading session of this week yesterday, Business Post reports.

This occurred as the various market participants begin to readjust to the new directive from the Central Bank of Nigeria (CBN) on who or not to invest in the government debt instrument.

Last week, the apex bank said effective Wednesday, October 23, 2019, institutional and retail investors would no longer be allowed to partake in the purchase of OMO bills at both the primary and secondary markets so as to improve lending to critical sectors of the nation’s economy.

The central bank had said in the circular to financial institutions in the country that the bills would only be sold to foreign portfolio investors, banks and discount houses.

At the market yesterday, Business Post observed that the huge decline suffered by the 30-day instrument had a massive effect on the yields at the close of transactions.

Yield on the short maturity fell by 0.57 percent to close at 11.47 percent from 12.04 percent and this consequently reduced the average yields by 0.11 percent to 12.64 percent.

Apart from the one-month bill which lost yesterday, yields on the other three tenors tracked at the trading session closed in the green zone.

Yield on the three-month tenor increased by 0.03 percent to close at 12.23 percent against 12.20 percent of the previous session. Yield on the six-month bill appreciated by 0.06 percent to 12.57 percent from 12.52 percent, while yield on the 12-month maturity jumped by 0.06 percent to 14.28 percent from 14.21 percent.

Meanwhile, at the money market yesterday, activities were bearish despite the wholesale foreign exchange funding by banks during the session.

The Open Buy Back (OBB) rate went down by 1.71 percent, while the Overnight (OVN) rate crashed by 1.86 percent. This consequently left the average rates at 4.65 percent after a decline of 1.79 percent.

At the close of business on Monday, the OBB rate dropped to 4.29 percent from 6.00 percent, while the OVN rate depreciated to 5.00 percent from 6.86 percent.

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