Interest Rate on Nigerian Treasury Bill Drops by 20bps
The monetary authority has lowered the interest rate on Nigerian Treasury bills with 1-year (364-day) tenors by 20 basis points (bps) to 16.43%. This move is aimed at reducing balance-sheet funding costs.
During the main auction held on Wednesday, the Central Bank of Nigeria (CBN) cut spot rates for Treasury bills with 182-day and 364-day maturities, responding to a growing interest in naira assets.
MarketForces Africa reported that the CBN auctioned N400 billion worth of Treasury bills on Wednesday, with plans to raise N100 billion from the 91-day bills, N100 billion from the 182-day bills, and N200 billion from the 364-day bills.
Investor subscriptions totalled approximately N3.063 trillion, significantly surpassing the N400 billion offered, indicating strong demand for naira assets driven by positive real returns. However, the total allotment was less than 23% of the bids submitted.
Investors interested in 91-day bills were fully satisfied, as the CBN allotted N102.188 billion at a stable spot rate of 15.95%.
Conversely, subscribers for 182-day Treasury bills received less than expected, with only N47.94 billion allotted against a subscription level of N66.989 billion. The spot rate for the bill also dropped by 20 basis points to 16.42%.
For the one-year Nigerian Treasury bills, investor subscriptions reached a substantial N2.893 trillion, far exceeding the N200 billion offered. The CBN allotted N542.64 billion in these long-term bills at a rate of 16.43%, which is 20 basis points lower than the previous spot rate.
In the secondary market, trading of Treasury bills remained steady, with the average yield staying unchanged at 17.84%. However, sell-offs in the 04-FEB and 18-MAR papers led to yield increases of 10 and 19 basis points, respectively. Zenith Bank Hits 52-Week High, Market Cap Now N4.2trn
