Treasury Bill Rate Inched Up 50 Basis Points at CBN Auction
At the Central Bank (CBN) auction on Friday, the stop rate on the 91-day Treasury bill inched up 50 basis points to 2.50%, while 182-day and 364-day were unchanged at 3.50% and 9.75% respectively.
Fixed income analysts at Chapel Hill Denham have projected stop rate on 364-day treasury bill to print at 10.00% following continuous yields re-pricing in the Nigerian debt market.
In the money market, as analysts projected, funding pressures increased due to provisioning by Deposit Money Banks (DMBs) for the retail foreign exchange auction.
Due to persisted liquidity squeeze in the financial system, the open buy-back and overnight rates jumped by 11.88% and 13.38% to 26.88% and 28.88% respectively.
However, market analysts said they are expecting N60 billion worth of matured open market operations (OMO) bills to hit the financial system on Tuesday.
In a note, fixed income analyst at Chapel Hill Denham said sentiments were broadly bullish today at the debt market, particularly in the bond market.
At the front end of the curve, the Nigerian Treasury Bill and OMO benchmark curve closed flat at an average of 4.76% and 8.10% respectively.
In the bond segment, the benchmark bond yield curve compressed by an average of 5 basis points to 13.17%, thanks to recovery at the short (-3bps to 11.88%), intermediate (-6bps to 13.36%) and long (-6bps to 13.96%) end of the curve.
At the Treasury bill auction, the CBN offered N117.6 billion worth of bills, split across three maturities: 91-day (N24.7 billion), 182-day (N10.0 billion), and 364-day (N82.8 billion). Analysts said the subscription level was decent at 2.0x, up from 1.7x previously.
However, the apex bank allotted N139 billion while the auction stop rate increased by 50 basis points on the 91-day to 2.50% as the 182-day and 364-day were unchanged at 3.50% and 9.75% respectively.
The Debt Management Office’s (DMO) monthly bond auction is scheduled to hold on Wednesday. At the auction, the DMO will be looking to raise N150 billion, split across three tenors: MAR 2027, MAR 2035, and APR 2049.
“The last auction cleared at 12.25%, 13.34%, and 13.85% respectively, and odds favour a higher marginal rate at the next auction”, Chapel Hill Denham said.
Treasury Bill Rate Inched Up 50 Basis Points at CBN Auction
