TUE OCT 08 2024-theGBJournal|The Nigerian Treasury bills secondary market traded on a calm note Tuesday but with a bullish undertone, as the average yield declined by 1bp to 22.9%.
Across the curve, the average yield declined at the short (-1bp), mid (-1bp) and long (-2bps) segments due to demand for the 79DTM (-1bp), 170DTM (-2bps), and 352DTM (-2bps) bills respectively.
Similarly, the average yield declined by 5bps to 24.5% in the OMO segment.
Trading in the FGN bond secondary market was quiet on Tuesday as well, as the average yield closed flat at 18.9%.
The secondary fixed income markets traded bearishly last week. Average yields across the Treasury bill and FGN bond markets rose as investors sought to position themselves for better rates at the OMO auction.
The average yield of Treasury bills trended up by 76bps to 22.68% pa as investors sold off along the mid-point to the long end of the yield spectrum, allowing average yields on those tenor buckets to gain 128bps and 101bps to 23.02% and 23.89%, respectively.
In the FGN bond market, the average yield rose by 33bps to 19.08% pa, driven by sell-off across all tenor buckets.
We expect yields to trend to continue to trend upwards gently from here, though we note that the monetary authorities have different methods of managing Naira liquidity and are unlikely to rely on market interest rates exclusively to achieve their objectives.
At the Money market, the overnight lending rate remained unchanged at 32.8% as the inflow from OMO maturities (N54.45 billion) was not sufficient to saturate the system liquidity.
The naira appreciated by 4.7% to N1,561.76/USD at the Nigerian Autonomous Foreign Exchange Market (NAFEM).
Breaking its winning streak, the Naira at the NAFEM window depreciated by 5.54% to N1,631.21/US$1 last week.
Renewed demand, likely stemming from travel and tuition payments, weighed on the market.
By contrast, the Naira in the parallel market appreciated by 1.80%, closing at N1,670.00/US$1; we think the market was supported by the CBN’s supply of US$20,000 to Bureaux de Change.
Consequently, the premium of the official rate to the street rate narrowed to 2.38%. The CBN’s published gross foreign reserves closed the week up by 1.36% (or US$517.01m) to close at US$38.58bn.
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