Nigerian Treasury Bills Rates Spike, 364-Day Hits 10%
The average yield on Treasury bills increased as the market began to see higher spot rates at the Central Bank of Nigeria’s primary market auctions following investors’ apathy on short-dated instruments.
Consequently, the average yield on T-bills dipped by 37 basis points to 3.6% as investors filled lost bids in the secondary market.
For the second time, spot rates increased as demand or subscription levels tempered even while liquidity in the financial system appears to be relatively stable.
A slew of analysts hasn’t changed their opinions, stating that changing market dynamics and expectation of inflation rate jumps will continue to alter investors’ mood on naira assets positioning.
Still, return on fixed interest instruments remains miles away from the average inflation record and analysts see the consumer price index (CPI) worsening amidst unsettled clouds of dust over the naira redesign policy.
Last week, stop rates notched higher as the CBN refinanced maturing Treasury bills worth N224.50 billion in the primary market, detail from auction result indicates.
At the Nigerian Treasury bills primary auction, the CBN offered market participants instruments worth N224.50 billion. Of the total sum, N1.03 billion was allocated for 91-day bills, N10.55 billion for investors interested in 182-day bills, and N212.92 billion for 364-day bills.
The auction was keenly contested with a total subscription of N906.21 trillion with more demand skewed towards the longer-dated bill which attracted N890.55 billion or 98.3% of the total subscription.
At the end of the auction on Wednesday, the monetary authority allotted bills worth N324.50 billion – N1.03 billion for the 91-day, N10.55 billion for the 182-day, and N312.92 billion for the 364-day
The 91-day bills saw the highest demand, according to fixed income traders with prices down compared to mid and long-dated bills. The stop rate on the short-dated instrument declined to 1.40% from 3.00%.
However, the stop rates for 182-day and 365-day bills increased to 6.00% from 3.24% and 10.00% from 9.90%, respectively, investment firms told clients via email. Naira Steadies as Banks Issue Update on FX Purchase
Elsewhere, open market operations (OMO bills) traded on a bearish foot. OMO bills worth N50 billion were repaid with no refinancing from the apex bank. Nigerian Treasury Bills Rates Spike, 364-Day Hits 10%