Yields Tighten as Fixed Interest Securities Investors Hibernate
Average yields on fixed income instruments were mixed on Monday as investors hibernate in a move to watch the market direction after spot rates price down at the Central Bank of Nigeria (CBN) primary market auction in the previous week.
Meanwhile, short term rates continue to decline in the money market due to healthy liquidity in the financial system. Today, the average interbank rate dropped by 117 basis points to close at 12.34%, as the Open Buy Back rate declined while the overnight rate also dropped.
Trading data tracked from the FMDQ Exchange platform shows that the overnight lending rate decreased by 1.33 percent or 133 basis points to close at 12.67 percent as against the last close of 14.00 percent seen on Friday.
Likewise, the Open Repo (OPR) rate decreased by 1.00 percent to close at 12.00 percent compared to 13.00 percent on the previous day. Inflow has been strong and funding pressures has been minimal. Like a pattern, liquidity strain build up on Friday due to outflow related to FX auction. Read: PFAs withdrawal, CRR Debits Tighten Financial System Liquidity
Trading activities in the Nigerian Treasury bills in the secondary market closed on a flat note today with the average yield across the curve remaining unchanged at 4.18 percent.
The Average yields across short-term, medium-term, and long-term maturities remained unchanged at 3.39 percent, 4.24 percent, and 4.92 percent, respectively, according to a market report from FSDH Capital.
In the OMO bills market, traders said the average yield across the curve closed flat at 5.27 percent. However, average yields across short-term and long-term maturities remained unchanged at 5.41 percent and 5.20 percent, respectively.
Relatively unimpressive, trading activities at the FGN Eurobond market traded mostly bearish as sell-side pressures were seen across the yield curve except for the Jul-2022 instrument that saw minimal activities. In sum, the average yield climbed by 3 basis points to close at 6.90%.
In the secondary market for FGN bonds, trading activities closed on a mildly positive note today, as the average bond yield across the curve cleared lower by 5 bps to close at 11.09 percent from 11.14 percent on the previous day.
FSDH said in a note that the average yields across short tenor, medium tenor, and long tenor of the curve declined by 16 basis points, 2 basis points, and 3 basis points, respectively.
The 23-MAR-2025 maturity bond was the best performer with a decrease in the yield of 43 bps. Furthermore, the secondary bond market may remain subdued in the short term.
Elsewhere, the Nigerian local currency, Naira, appreciated by 0.02 percent as the dollar was quoted at ₦416.67 as against the last close of ₦416.75 at the Investors and Exporters DX window.
Most participants maintained bids between ₦410.00 and ₦444.00 per dollar, traders at FSDH Capital said in a market report on Monday. #Yields Tighten as Fixed Interest Securities Investors Hibernate
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