Interest Rate on Nigerian Treasury Bills Drops to 21.80%
The discount rate on 364-day Nigerian Treasury bills fell further at the primary market auction amidst a strong appetite for long-dated instruments. The slowdown in spot rate aligned with market expectations amidst the consumer price index rebasing plan.
MarketForces Africa reported that the Debt Management Office conducted a primary market auction midweek on behalf of the Central Bank of Nigeria (CBN), where the authority offered N530 million worth of Treasury bills across standard maturities.
At the auction, the DMO offered N530 billion across the 91-, 182-, and 364-day papers. Yield-hungry investors raised significant bets on one-year bills with expectation to boost portfolio return.
According to auction results, Debt Office received a total subscription of ₦2.54 trillion, more than four times of initial offers. Further breakdown revealed that investors showed strong appetite for 364-day paper, which accounted for 98% of total subscriptions, investment firms said in separate notes.
The general bid-to-cover came in at 4.78x, higher than the previous auction’s 2.95x, reflecting strong investor interest, TrustBanc Financial Group Limited explained. The DMO who took advantage of excess demand allotted ₦756 billion, which was 43% higher than the amount on offer.
Meanwhile, the market report stated that 364-day Nigerian Treasury bills accounted for 94% of the total allotment. Amidst expectation of a yield repricing following an inflation surge, the spot rate pricing was mixed.
Stop rates for the 364-day paper declined by 82 bps to 21.80%, while rates for the 91-day and 182-day papers remained unchanged for the seventh consecutive auction, analysts said.
At the most recent Primary Market Auction (PMA) on January 8, 2025, the CBN offered N515 billion in new Treasury Bills across the three maturities. This represents a significant 54.87% increase compared to the N332.53 billion in the last auction in December 2024.
The auction attracted strong investor demand, pushing total subscriptions to N1.48 trillion, more than double the N607.83 billion recorded at the previous auction.
“We believe the rebasing of the Consumer Price Index (CPI) and the potential moderation in inflation, alongside the government’s focus on managing borrowing costs, could further influence the CBN to lower rates at the auction,” Meristem Securities Limited predicted before the auction. #Interest Rate on Nigerian Treasury Bills Drops to 21.80% Naira Plunges as Banks Resume FX Sales to Customers
