CBN Auction: Rates on Nigerian Treasury Bills Crash

CBN Auction: Rates on Nigerian Treasury Bills Crash

The Central Bank of Nigeria (CBN) has reversed its higher rates on Treasury bills the monetary authority rolled over at the primary market auction (PMA) conducted on Wednesday. 

The apex bank auction results showed that the 91-day Treasury bill’s spot rate fell to 5%, 100 basis points below the previous auction. Also, at the belly, 182-day bills fell 200 basis points to 6%. At the previous auction, the CBN offered 8% to market participants after 25 basis points benchmark interest rate hike. The same price down was seen in long tenor bills.

The auction results showed that the spot rate on 364-day T-bill declined strongly to 9.80% from 12.15%.

Fixed income market analysts said in their market updates that demand T-bills improved, as evidenced by the higher bid-to-cover ratio of 5.43x versus 1.51x reported at the previous auction sales due to robust liquidity in the financial system.

However, short-term benchmark rates faced mild liquidity pressures midweek ahead of debit for Treasury bills auction. The open repo rate (OPR) and the overnight lending rate (OVN), dropped to 2.83% (from 2.75%) and 3.67% (from 3.2%), respectively, Cowry Asset Management said in an update.

Meanwhile, trading activities in the secondary market were mixed despite falling stop rates at the CBN primary market auction. The average secondary market yield on T-bills climbed to 7.25%. 

Elsewhere, the FGN bond market was flat across most maturities in the over-the-counter bond market.

However, analysts at Cowry Asset saw buy interest across short and long-dated securities, particularly the 26 APR 2049 debt, resulted in a contraction in the average secondary market yield to 13.02% (from 13.04%).

The 20-year FGN borrowing cost also decreased, yielding 14.90% (from 15.00%), according to the investment firm.  Conversely, the 10-year and 20-year bonds remained steady at 13.37% and 15.12%, respectively. 

Elsewhere, FGN Eurobonds faced depreciation across all tracked maturities, reflecting renewed bearish sentiment. Similarly, the average secondary market yield saw an increase to 10.42% (up from 10.36%). #CBN Auction: Rates on Nigerian Treasury Bills Crash

Naira Steadies as Banks Issue Update on FX Purchase