Wednesday, June 23, 2021

    Average yields on Nigerian T-bills spikes after auction suspension

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    Average yields on Nigerian Treasury bills (T-bills) inched up as the Federal Government of Nigeria (FGN) postponed an auction that was initially scheduled for Tuesday.

    As analysts had projected, a total of N90 billion open market operations (OMO) maturity hit the financial system today to bolster liquidity.

    Chapel Hill Denham however stated that funding pressure persisted, with the open buy-back and overnight rates expanding by 50 basis points apiece to 15.00% and 15.50%, respectively.

    Amidst preparation for the holiday, sentiments were benign in the fixed income secondary market as investors traded quietly and with caution.

    At the front end of the curve, the treasury bill benchmark curve closed higher by an average of 7 basis points to 4.76%, mainly due to upward repricing of rates at the long (+18bps to 6.28%) end of the curve.

    Meanwhile, the OMO curve closed flat at 8.10%. On the other hand hands, in the bond market, the benchmark curve similarly closed flat at 13.22%.

    Against market expectation, the FGN announced that the treasury bills auction, which was initially scheduled for today, has been postponed.

    According to the Federal Government in a notice, the auction and settlement date has been fixed for the same day on the 14th of May, 2021.

    The FGN will be looking to raise N117.6 billion worth of bills, split across three maturities: 91-day (N24.7 billion), 182-day (N10.0 billion), and 364-day (N82.8 billion), according to Chapel Hill Denham.

    In a related development, the Nigerian local currency, Naira, closed flat across the different strata of the foreign exchange (FX) window, with the I&E Window rate closing at N410.67.

    Meanwhile, currencies traders said the parallel market closed at N483.00 amidst foreign exchange scarcity in the Nigerian economy.

    Rates on Debt Instruments Surge as Liquidity Squeeze Persists

    However, the FX rate remained unchanged in the Official and Secondary Market Intervention Sale (SMIS) segment at N379.00 and N380.69, respectively as External reserves extended decline, closing lower to US$34.72 billion.

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