Nigerian T-Bills Rate Spikes to 13.97%

Nigerian T-Bills Rate Spikes to 13.97%

Spot rate on 364-day Nigerian treasury bills (NTB) spiked to 13.97% despite a significant surge in subscription level at the primary market auction sales conducted by the monetary authority on Wednesday.

Fixed income securities investors stake N154 trillion on Nigerian Treasury bills at the central bank primary market auction conducted on Wednesday, results show. The amount was more than 3 times N303 billion bills that matured, and refinanced by the apex bank in order to manage the liquidity level in the system.

At the auction, the CBN allotted N303.21 billion despite a buoyant subscription level despite negative interest yield on naira assets in the fixed income market. For the auction sales, the total subscription of N1.54 trillion translates to a bid-to-offer ratio of 5.1x.

However, the average stop across the 3 tenors on offer increased by 215 basis points, according to CardinalStone Securities Limited.  In reaction, the secondary market was cold with pockets of transactions as pressures mounted on financial system liquidity.

This pushed short-term benchmark rates in the money market higher. A development that forced local deposit money banks visit to the CBN standing lending facility to raise funds.

Money market rates, such as the open repo rate increased by 26 basis points to 24.06%. The overnight lending rate stayed steady at 24.75%, according to data from the FMDQ Exchange platform. 

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CBN auction result showed that 91-day spot rate surged by 19 basis points to 5.19%, 182-day was priced at 8%, representing a 200 basis points increase and 364-day T-bill was closed at 13.97% from 9.80%.

Compared with the previous auction, demand for T-bills actually declined as evidenced by the lower bid-to-cover ratio of 5.09x versus 5.43x subscription level reported in the previous auction, Cowry Asset said in its market update.

The investment firm said nonetheless, the average secondary market yield on T-bills was unchanged at 8.28% as investors switched attention to auction proceedings. #Nigerian T-Bills Rate Spikes to 13.97% N6.9bn Fraud: Emefiele Allegedly Opts for Plea Bargain

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