T-Bills, bond market quiet as traders close books for the year

Activities at the Treasury Bills (T-Bills) and bond markets remained quiet on Monday, as traders prepare to close books for the year, analysts at Associated Discount House Limited have confirmed.

According to the analysts, though market mood was bearish, yields on treasury securities and bonds rose barely 15 basis points (bps) and 5bps, respectively.

“Notably, there was pressure on the 20-year note, the 12.1493% FGN July 2034, which closed 20bps higher at 15.21%/N81.00. In the treasury bill market, there was mild appetite for short-dated bills but a sell-off on the longer-dated securities, a reflection of last week’s primary market auction result, where the 91-day and 182-day bills closed at 11.249% and 14.48%, respectively (a notable rise on previous auction result when same maturities closed at 11.00% and 13.849%, respectively)”, the analysts said in their daily market round-up.

Accordingly, the analysts observed that the system remained liquid, following last week’s disbursement of the statutory allocation to states and local governments.

Thus, money market rates eased further, with the Open Buy Back (OBB) and overnight rates closing at 11.17% and 11.58%, respectively.

“We expect the money market to sustain this normalised rate through the year and start 2015 on a soft note, as we estimate a total of N1.1 trillion maturity from treasury bills in January. Hence, even as concern over election risk and weak fiscal position may defy a moderation in the yield environment, we expect the interbank market to remain relatively calm, in the absence of regulatory volatilities. In the session ahead, we look forward to soft moderation in yield on both treasuries and bond, even as current yield environment defies conventional year-end portfolio pumping effect on the yield curve,” the analysts added.

Notwithstanding CBN oversight on the CBN and moderated FX trading activity in the interbank market, the naira snapped recent stability, depreciating 57bps to close at N182.15/per dollar.