Treasury Bills Yield Hits 15.4% After Revised Auction

The average yield on Nigerian Treasury bills spiked to 15.4% in the secondary market after the monetary authority jerked up spot rates on 364-day bills to 19%.

The elevated yield in the fixed income market space follows changing market dynamics, a signal that the monetary policy committee of the Central Bank would likely hike benchmark interest in February meeting.

To match this fresh rates re-direction, bearish sentiments dominated the Treasury bills secondary market as the average yield across all market segments expanded by 626 basis points.

In its market note shared with investors, Cordros Capital Limited said across the market segments, the average yield advanced by 569 basis points to 15.4% in the T-bills secondary market. The sell pressures also lifted the yield on OMO bills upward by 830 basis points to 17.9%, according to traders.

Analysts attribute this negative performance to sell-offs induced by the CBN’s revised NTB auction calendar on Monday to record-high levels, and the significantly higher yields at the end of the Wednesday PMA filtering into the secondary market.

At the primary auction, the CBN revised the auction offer to NGN1.00 trillion – NGN200.00 billion of the 91-day, NGN200.00 billion of the 182-day, and NGN600.00 billion of the 364-day bills – from the NGN417.06 billion previously announced.

The auction was keenly contested as the total subscription settled higher at NGN1.98 trillion with a bid-to-offer of 2.0x. Eventually, the CBN allotted exactly what was offered. The spot rate for 91-day bills rose to 17.24% from 5.00%. In addition, the spot rate for 182-day bills was increased to 18.00% from 7.15%), and 364-day bills was priced at 19.00% from 11.54%. #Treasury Bills Yield Hits 15.4% After Revised Auction#

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