Traders See Steady Yields after Auction Spot Rate Bumps
The fixed income market remains its cautious trading record on Thursday as traders see yield curves staying relatively flattish after spot rate on long-dated T-bills bumped at the Central Bank of Nigeria (CBN) primary market auction (PMA) conducted yesterday.
In the money market, short term rates continue to descend due to a lack of funding pressures in the financial system on the back of a relatively healthy liquidity position.
Today, market data shows that the average interbank rate dropped further by 117 basis points to close at 1.34%, following declines at both the Open Buy Back rate and Overnight rate.
Data from FMDQ Exchange shows that the overnight rate decreased by 1.33 percent to close at 1.50 percent as against the last close of 2.83 percent. Similarly, the Open Repo (OPR) rate decreased by 1.00 percent to close at 1.17 percent compared to 2.17 percent on the previous day.
In the secondary market, trading activities in the Nigeria Treasury Bills closed on a flat note with average yield across the curve remaining unchanged at 4.43 percent.
Average yields across short-term, medium-term, and long-term maturities remained unchanged at 3.51 percent, 4.04 percent, and 5.18 percent, respectively, according to Fixed income traders notes.
The CBN held its scheduled Primary Market Auction on February 9, selling NT-Bills worth ₦214.96 billion across the 91-day (₦1.91 billion), 182-day (₦1.82 billion), and 364-day (₦211.23 billion) tenors.
The stop rates for the 91-day and 182-day remained unchanged at 2.48 percent and 3.30 percent, respectively.
However, the stop rate for the 364-day tenor cleared lower at 5.20 percent (-20 bps). The auction was oversubscribed by 355 percent, with bid-to-cover ratios settling at 0.53x (91-day), 0.70x (182-day), and 4.90x (364-day).
In the open market (OMO) bills market, the average yield across the curve closed flat at 5.67 percent, FSDH Capital said in a note. Average yields across short-term and long-term maturities remained unchanged at 5.42 percent and 5.81 percent, respectively.
FGN bonds secondary market closed on a mildly positive note today, as the average bond yield across the curve cleared lower by 1 basis point to close at 11.51 percent from 11.52 percent on the previous day.
Average yields across short tenor and medium tenor of the curve declined by 7 basis points and 1 basis point, respectively. However, the average yield across the long tenor of the curve increased by 2 basis points.
The 23-MAR-2025 maturity bond was the best performer with a decrease in the yield of 14 bps, while the 18-JUL-2034 maturity bond was the worst performer with an increase in the yield of 13 bps. FSDH Capital see the secondary bond market subdued in the short term.
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