After days of quiet outturn in the fixed income market, activities in the Nigerian Treasury bill space picked up Thursday, according to a market report. However, the treasury bills benchmark curve contracted by four basis points (bps) to close the day at 5.74%, Chapel Hill Denham said in a reprt amidst ongoing arbitrage activities in the currency market.
Chapel Hill Denham said there was a mix of buy and sell-side trades as investors’ signaled their interest to reposition from the short-end of the curve to the mid and long segment of the curve.
Meanwhile, liquidity in the money market continued to improve on Thursday as the open buy back (OBB) and overnight (O/N) rates declined by 33bps and 58bps to 14.00% and 14.25%.
This was on the back of previous day liquidity which continues to sustain the market and reduced activities of market participant in the Central Bank’s Standing Lending Financing (SLF) window.
Also, the open market operations (OMO) benchmark curve expanded by 19bps to 9.48% with mostly bearish sentiments from investors, analysts said. In the secondary bond market, it was noted that investors were mostly bullish on the short and intermediate end of the curve.
“We believe the movements in the bond space are triggered by yield-driven investors, buying maturities that reasonably price in their risks”, Chapel Hill Denham said. Again, the bond benchmark curve declined by 18bps to 13.01%.
In the currency market, Naira appreciated marginally, by 0.04% or 4 kobo, closing at N410.9. Analysts at Chapel Hill Denham also confirmed that arbitrage activities to take advantage of the movement in the NAFEX rate supported the Naira appreciation.
However, the parallel market exchange rate slumped by 20bps to N499.00 as sellers continue to hoard their dollars to take advantage of future volatilities in the exchange rate.