CBN Hikes Interest Rates on Treasury Bills, Rejects Bids
The Central Bank of Nigeria (CBN) increased discount rates on Nigerian Treasury bills sold to investors at the midweek primary market auction (PMA). The results of the auction led by the Debt Management Office, DMO, on behalf of the CBN showed that investors’ appetite for naira assets remained solid amidst a shift in global sentiment.
On Wednesday, the Central Bank offered N800 billion worth of Nigerian Treasury bills to auction participants’ standard maturities, which comprise the 91-, 182-, and 364-day papers. Reflecting a strong appetite for government securities with relatively high return and stability, investors’ staked N1.13 trillion on the CBN offer.
Auction details revealed that investors showed preference for one-year bills. Demand for 364-day Nigerian Treasury bills accounted for 80% of total subscriptions received by the authority. Hence, the auction bid-to-offer settled at 1.41x, lower than the previous auction’s 2.04x.
A total of N424.58 billion worth of Nigerian Treasury bills were allotted to alpha-seeking fixed income market investors, falling short of the offer size by 47%. Further details showed that 364-day Nigerian Treasury bills sold to investors accounted for 49% of the total allotment.
Stop rates for the 364-day paper remained unchanged at 19.63%, while the 91-day and 182-day bills advanced by 50 basis points and 100 basis points, respectively, to close at 18.50% and 19.50%.
It was a quiet day in the secondary market for bills as participants shifted focus to the Nigerian Treasury bills auction. DMO offered N800 billion, which it failed to fill as against the N927 billion maturing. Hence, investors remained cautious, with light flows seen in select maturities, which caused the average yield on NTBs to moderate to 21.18%. First Holdco Falls below N1 Trillion in Equities Market
