Treasury Bills Rate Drops to 13.05% at CBN Auction
Proceeding at the Central Bank of Nigeria (CBN) primary market auction (PMA) on Wednesday ended with rates cut across Treasury bills tenors with a relatively strong demand that was anticipated on account of seesaw movements in the financial system liquidity.
However, liquidity position improve while traders positioned strongly in the local debt capital market, targeting better returns on their respective portfolios as naira assets continue to underperform the inflation trend.
A slew of fixed income market analysts had predicted that the strained liquidity position will affect demand levels and expected possible adjustment on spot rates on Treasury instruments given that the market is still in the mood for pricing the recent interest rate hike.
And real returns in the debt capital still remain largely exposed to a higher inflation rate which analysts project to rise further due to the latest pressures on petrol motor spirit (PMS).
According to auction result, spot rates for 91-day Nigerian Treasury bills (NTB) was steady, while 182-day and 364-day bills were priced down even with tight liquidity in the market. READ Bond Drops, Treasury Steadies after Policy Rate Hike
Though, traders had initially cashed out Treasury bill holding before the apex bank opened a midweek auction for subscription, forcing the average yield on the short-term debt instruments to drop.
The detail showed that 182-day bills were sold at 8% on Wednesday, down from 8.05% at the previous auction while 364-day Treasury bills were offered to market participants at 13.05%, a strong decline from 14.84% at the previous auction.
Analysts said earlier this week that opening market liquidity was reported at N203.7 billion while call, overnight and repo rates closed within a range of 9% – 14%, according to analysts noted.
MarketForces Africa reported that the apex bank is expected to roll over more than N54 billion in maturing bills amidst tight liquidity in the financial system. # Treasury Bills Rate Drop to 13.05% at CBN Auction