CBN Increases December Treasury Bills Offers by N1.085trn
The Central Bank of Nigeria (CBN) has increased treasury bills offers for subscription by N1.085 trillion, according to an updated notice shared during the week.
The authority has continued to keep the market guessing about its moves, beating a slew of analysts to their estimation games, with the latest being a significant increase in the spot rate of one-year Treasury bills.
By market consensus, the CBN was projected to temper interest on the Nigerian Treasury Bills as the real interest rate printed around 10%. Return on investment spiked as the CBN continues to chase the country’s 16.05% headline inflation with a 27% policy rate.
In a surprising twist, the stop rate on the one-year Treasury bill at Wednesday’s NTB auction jumped 146 bps to 17.50%, triggering a bearish repricing in the secondary market, according to AAG Capital Limited.
The investment firm said the development caused yields to rise by at least 100 basis points across all instruments in the fixed income market.
“Adding to the market pressure, the CBN on Thursday released a revised NTB auction calendar for December, introducing an additional ₦1.09 trillion in supply,” AAG Capital Limited said.
First, an additional auction has been scheduled for Wednesday, December 10, with a total offer size of N750.00 billion, comprising N100.00 billion for the 91-Day, N150.00 billion for the 182-Day, and N500.00 billion for the 364-Day.
Second, the offer size for the December 17 auction has been increased from N365.00 billion to N700.00 billion, made up of N100.00 billion for the 91-Day, N100.00 billion for the 182-Day, and N500.00 billion for the 364-Day.
Hence, N1.45 trillion will be raised in the next two weeks via primary market operations.
The enlarged offer amplified yield pressures across short- and long-term instruments, including Treasury bills, FGN bonds, and OMO securities, as investors recalibrated their pricing to absorb the higher supply, according to AAG Capital Limited.
The development made the fixed income environment highly volatile, driven by both the unexpected rise in stop rates and the expansion of primary market supply. Rekindled Appetite: UBA Closed High on Early Price Recovery
