Interest Rate on Nigerian Treasury Bill Spikes to 21.45%
The Central Bank of Nigeria (CBN) has further increased spot interest rate on 36-day treasury bills (NTB) instrument to about 21.50% following an interest rate hike at its policy committee meeting in February 2024.
Analysts had predicted that the high interest rate environment would trigger rates repricing on government borrowing instruments. The CBN balance funding cost is expected to climb following interest rate push to 22.75%.
In a bid to control liquidity in the financial system, MarketForces Africa reported that the apex bank conducted a primary market auction across tenors: 91-day, 181-day, and 364-day. The 364-day bills recorded the highest rate at 21.49 per cent.
According to the auction result, subscriptions came stronger amidst elevated yield in the fixed income market and an expectation that fresh catalysts for rates repricing surfaced after the monetary policy committee meeting last month.
Following a large subscription level, the CBN allocated Treasury bills worth N1.32 trillion to fixed interest securities investors; majorly institutional and other authorised dealers – including deposit money banks.
One year T-Bill was priced higher at 21.49 per cent in an attempt to lure foreign portfolio inflows. Market participants staked N1.54 trillion and CBN eventually sold N1.29 trillion for the 364-day T-bills auction.
The auction results revealed that the range of bid for the 364-day stood at 17.0000-27.0000 per cent, as subscription levels for the 364-day T-Bills was robust, reflecting heightened investor appetite amidst the current economic landscape.
For the 182-day auction, the CBN offered N10.55 billion to investors and recorded N51.51 billion, but finally allotted N10.55 billion. The CBN allocated N14.42 billion in 91-day T-Bills, with a stop rate of 17.24 cent and received a subscription and total sales of N66.63 billion. It allocated N14.42 billion, the amount it offered to the investing public.
In the money market, Nigerian interbank rates trended higher across all tenor buckets, reflecting a liquidity squeeze in the system. Interbank rate rose by 23 baiss points to 28.81% on Wednesday, as per FMDQ platform data.
Key money market rates, including the open repo rate (OPR) and overnight lending rate (OVN), increased by 1.29% and 1.42%, to 29.50% and 30.46%, respectively, Cowry Asset Management said in a note. In the secondary market for Nigerian Treasury bills, the average yield closed at 16.56%. #Interest Rate on Nigerian Treasury Bill Spikes to 21.45% Nigeria Bonds, Treasury Bills Yields Collide at 17.2%
