T-Bills Market Bullish as Money Market Rate Adds 6.04%

By Dipo Olowookere

The treasury bills market was bullish on Monday as investors prepare for the sale of the government’s debt instrument via primary market tomorrow.

Business Post reports that market players are of high hopes that treasury bills yields will increase as towards the end of the year and early next year, when the general elections will hold.

The Central Bank of Nigeria (CBN) had hinted recently that it would rate interest rate to curtail an anticipated rise in inflation likely to be caused by huge spending by politicians preparing for the polls.

However, at the close of transactions at the market yesterday, the T-bills yields declined by 0.17 percent to finish at 12 percent.

Apart from the 6-month tenor, which increased by 0.001 percent, every other tenors declined on Monday.

The 0-month bill went down by 0.34 percent, the 3-month bill by 0.23 percent, the 9-month paper down by 0.22 percent and the 12-month note fell by 0.03 percent.

Meanwhile, the money market rate recorded a growth of 6.04 percent yesterday to settle at 13.38 percent.

Specifically, the Open Buy Back (OBB) increased to 12.83 percent from 6.75 percent, while the Overnight (OVN) rate went up to 13.92 percent from 7.92 percent.

The rise in the market rate was likely due to outflows for a wholesale FX funding by banks, which is estimated to have compressed the net system liquidity below N300 billion.

Rates are expected to trend lower in subsequent sessions, with inflows from OMO maturities and FAAC payments expected before week end.