Interest Rate on Nigerian Treasury Bills Increases by 50bps
Investors who bought 364-day tenored Treasury bills at the Central Bank of Nigeria’s (CBN) primary market auction received a 50 basis point increase in the spot rate.
Following adjustment to the benchmark interest rate due to a sustained increase in headline inflation, the market has repriced naira assets and always looks for catalysts that would drive yield movement positively.
At the auction, the Debt Management Office (DMO) offered N610.80 billion worth of Treasury bills for sales on behalf of the Central Bank of Nigeria (CBN).
At the auction, alpha-seeking investors increased their bets, with preference for longer tenor. Details from the auction results revealed that total subscriptions came at N1.17 trillion across the 91-, 182-, and 364-day maturities.
According to details from the auction results, 95% of the subscription was for the 364-day Treasury bills. The midweek auction settled at 1.93 times bid-to-cover, which was significantly higher than the previous auction’s 1.30x.
The DMO successfully allotted N693.05 billion, representing a 13% increase compared with the amount on offer. Fixed income analysts noted that the 364-day paper received 92% of the total allotment at the end of the auction.
Stop rates for the 364-day paper rose by 50 basis points, driving its yield to a record 30.67%, the highest since the DMO began selling, TrustBanc Financial Group said in a note.
Meanwhile, stop rates for the 91- and 182-day papers remained unchanged. Overall, the average benchmark yield closed at 24.27%. Naira Depreciates Ahead of 2-Week Automated FX Trading Trial
Fixed income market analysts said the rest of the week will be shaped by the demands of market players who lost out at the auction. #Interest Rate on Nigerian Treasury Bills Increases by 50bps
