CBN Reprices Interest Rates on Nigerian Treasury Bills
Details from the midweek primary market auction showed that the Central Bank of Nigeria (CBN) raised the spot rate on Nigerian Treasury bills maturing in one year by 25 basis points, following adjustments on short and long-dated bills.
The authority floated N480 billion worth of Nigerian Treasury bills instruments across standard tenors at the primary market auction (PMA), with more than N1 trillion in aggregate subscription from yield hunting fixed interest securities investors.
MarketForces Africa reported that the auction was conducted by the Debt Management Office (DMO) on behalf of the monetary authority, causing secondary market activity to close on a soft note. The auction attracted ₦1.012 trillion in total subscriptions, with ₦585.25 billion allotted to investors across standard tenors.
Nigerian Treasury bills with 91 days to maturity was priced at spot rate 15.32%, a 3 basis decline from previous rate. At the mid-tenor, treasury bills with 182 days to maturity was sold to investors at the spot rate of 15.50%, the same as the previous offer.
However, Nigerian Treasury bills that will expire in 364 days was sold at 17.69%, a 25 basis points upward adjustment to its previous rate. Transaction in the secondary market was limited, with only slight movements noted on the 5-Mar and 20-Aug Nigerian Treasury bills as well as the 25-Nov OMO bill.
Analysts said the trading may be mixed on Thursday as some investors sell lower-yielding papers following the higher stop rate on the 1-year paper, while others seek more attractive opportunities.
The authority is mopping up excess liquidity while replacing financial instruments that expired this week to reduce the amount of free funds in the financial markets. Recall that at Tuesday’s OMO auction, the apex bank offered NGN600.00 billion for the 84 days paper, which was oversubscribed at NGN1.18 trillion (2.0x bid-to-offer).
Ultimately, N620.65 billion was allotted at a stop rate of 26.40%, underscoring the CBN’s continued liquidity sterilization drive at elevated yields. #CBN Reprices Interest Rates on Nigerian Treasury Bills CBN Offers 26.44% Interest Rate on 84-Day OMO Bills
