Investors raise treasury bills holdings ahead of auction

Bamidele Famoofo

The average yield on Nigerian Treasury bills slumped slightly in the secondary market due to buying interest ahead of the primary market auction (PMA) scheduled for Wednesday.

Trading activities opened on a calm note with a bullish tilt. Fixed income market participants leveraged improved liquidity in the money market to boost portfolios. Traders said despite the sizeable amount in the financial system, money market managers maintained a cautious stance in anticipation of the upcoming T-Bills auction.

Bids came in from investors expecting a decline in yields at the next auction, as well as from those eager to utilise their surplus liquidity. The most activity was recorded for bills maturing in March, April, June, July, and December.

Local investors capitalised on attractive yields, particularly at the far end of the curve, with mild traction for November and December bills, TrustBanc Financial Group Limited said in a note.

Overall, the average benchmark yield declined by 6 bps to close at 25.51per cent. “Looking ahead, we expect a quiet session as market players prepare their bids for the PMA scheduled for Wednesday,” analysts said.

Across the curve, the average yield declined at the short (-5 bps), mid (-5 bps), and long (-6 bps) segments. The yield contraction was driven by demand for the 80-day to maturity (-5bps), 171-day to maturity (-5bps), and 318-day to maturity (-6bps) bills, respectively. Conversely, the average yield expanded by 36 bps to 27.5 per cent in the OMO segment.