INTEREST RATE ON NIGERIAN TREASURY BILLS INCREASES TO 21.24%
The Debt Management Office (DMO), on behalf of the Central Bank of Nigeria (CBN), conducted a primary market auction (PMA) last week, where the spot rate on Nigeria’s 364-day Treasury bills was increased to 21.24%. This rate hike aims to boost investor interest in naira assets amidst rising inflation figures.
Auction Details:
- Total Offering: N166.11 billion for refinancing.
- Breakdown:
- 91-day bills: N27.11 billion
- 182-day bills: N1.49 billion
- 364-day bills: N137.50 billion
Subscription and Allocation:
- Aggregate Subscription: N308.66 billion, resulting in a bid-to-offer ratio of 1.9x, down from the previous auction’s 3.4x with a total subscription of N773.98 billion.
- Total Allotted: N207.27 billion.
- 91-day bills: N28.47 billion
- 182-day bills: N9.16 billion
- 364-day bills: N169.64 billion
Spot Rates:
- 91-day bills: Steady at 16.33%.
- 182-day bills: Steady at 17.44%.
- 364-day bills: Increased to 21.24% from 20.68%.
Market Reactions:
- Secondary Market: Bearish sentiments persisted due to sell pressures on mid-dated papers. The average yield across all instruments increased by 32 basis points to 23.7%.
- Treasury Bills: The average yield rose by 57 basis points to 23.3%.
- OMO Bills: The yield contracted by 11 basis points to 24.2%.
Cordros Capital Limited noted that mixed activities are expected in the secondary market due to modest liquidity levels, which may not drive strong demand for bills or significantly lower yields.
The Debt Management Office (DMO), on behalf of the Central Bank of Nigeria (CBN), conducted a primary market auction (PMA) last week, where the spot rate on Nigeria’s 364-day Treasury bills was increased to 21.24%. This rate hike aims to boost investor interest in naira assets amidst rising inflation figures.
Auction Details:
- Total Offering: N166.11 billion for refinancing.
- Breakdown:
- 91-day bills: N27.11 billion
- 182-day bills: N1.49 billion
- 364-day bills: N137.50 billion
Subscription and Allocation:
- Aggregate Subscription: N308.66 billion, resulting in a bid-to-offer ratio of 1.9x, down from the previous auction’s 3.4x with a total subscription of N773.98 billion.
- Total Allotted: N207.27 billion.
- 91-day bills: N28.47 billion
- 182-day bills: N9.16 billion
- 364-day bills: N169.64 billion
Spot Rates:
- 91-day bills: Steady at 16.33%.
- 182-day bills: Steady at 17.44%.
- 364-day bills: Increased to 21.24% from 20.68%.
Market Reactions:
- Secondary Market: Bearish sentiments persisted due to sell pressures on mid-dated papers. The average yield across all instruments increased by 32 basis points to 23.7%.
- Treasury Bills: The average yield rose by 57 basis points to 23.3%.
- OMO Bills: The yield contracted by 11 basis points to 24.2%.
Cordros Capital Limited noted that mixed activities are expected in the secondary market due to modest liquidity levels, which may not drive strong demand for bills or significantly lower yields.