Interest Rates on Nigerian Treasury Bills Fall Below 16%
The spot rates on Nigerian Treasury bills fell below 16% across standard tenors following a surprise policy adjustment by the Central Bank committee on Tuesday.
The authority opened a primary market auction on Wednesday, offering N500 billion in Nigerian Treasury bills to investors, after the monetary policy committee reduced the overall lending rate to 23%.
The monetary easing, the highest in years, dragged real returns on naira assets below 9% as the authority chases 15.39% inflation with a 23% benchmark interest rate.
On behalf of the CBN, the Debt Management Office (DMO) auctioned N500.0 billion across the 91-day, 182-day, and 364-day maturities.
The auction was oversubscribed, attracting about N4.231 trillion in total subscriptions, while the DMO allotted about N497.6 billion to investors at lower rates.
The auction results released showed that the spot rate on the 91-day Nigerian Treasury bill declined by 80 basis points (bps) to 15.50%.
Nigeria also reduced the spot rates on 182-day and 364-day Treasury bills by 70 bps and 73 bps, respectively, to 15.80% and 15.89%.
The sharp 350bps reduction in the monetary policy rate triggered a rally in the secondary market as investors moved to lock in yields on naira-denominated assets.
Analysts at AAG Capital Limited said the auction marked a broad-based repricing, with spot rates falling 70-80 basis points, backed by strong liquidity and pose -MPC demand.
This allowed the Apex Bank to raise more at materially lower rates, with the Nigerian Treasury bill with a 364-day tenor attracting over N4 trillion in subscription.
In the secondary market, robust trading activity and strong investor buying interest drove widespread bullish sentiment, pulling the average T-Bill yield down by 43 bps to 18.38%.
Also, traders said they saw significant demand in the bond market. Equities Investors Gain N374bn as Nigerian Bourse Extends Rally
