T-Bill Yield Steadies at 14.4%, OMO Slumps to 15.9%
In the secondary market for Nigerian government borrowing instruments, money has continued to go to where it is treated well. The federal government has been borrowing at cheaper rates, selling borrowing instruments to investors seeking to maintain low risk profile.
Recent data from the National Pension Commission (PENCOM) showed that Pension Fund administrators (PFAs) pumped more than 65% of total pension assets into FGN instruments. The report showed that assets under management (AUM) in the Nigerian pension fund industry reached N17.35 trillion by the end of September 2023.
Yields have been depressed, suppressed by financial repression, according to market critics. But there seems to be a change in the tide as debt investors started to refuse to flow along depressed rates on Naira assets.
In the secondary market, there was a thin transaction on Treasury bill instruments on Tuesday amidst a shift in risk sentiment that followed Nigeria’s accelerating headline inflation.
There have been rising yields in the secondary market in recent times as investors offloaded naira assets. A sustained request by investors for higher returns has increased the benchmark yield on Nigerian bills above 14%.
Benchmark yield closed flat at 14.4% as treasury bills secondary market recorded marginal trades. Buying momentum has seized for the past week as fund managers took exits.
Across the curve, Cordros Capital Limited told investors in a note that the average yield was unchanged at the short and mid segments. But yield inched higher at the long (+1bp) end due to profit-taking on the 352-day to maturity (+16bps) bill.
Elsewhere, the average yield pared by 1bp to 15.9% in the OMO segment. Selloffs on instruments followed the Central Bank of Nigeria’s primary market auction last week. The apex bank has been offering better rates at OMO auctions to attract foreign investors into the fold.
In the money market, short-term rates decline following record improvements in financial system liquidity. Key money market rates: The open repo rate (OPR) and the overnight lending rate (OVN) increased by 0.25% and 0.41% to reach 16.32% and 17.29% respectively.
The secondary market for FGN Bonds was bearish at the close of Tuesday’s trading session as the average yield slightly rose by 12 basis points to close at 15.75%.
This was a result of the MAR-25 FGN bond being the worst performer with a yield expansion of 0.76%, according to Cowry Asset Limited. #T-Bill Yield Steadies at 14.4%, OMO Slumps to 15.9% PFAs Pump 65% of Pension Assets in FG Securities
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