The Central Bank of Nigeria (CBN) auctioned long-dated Treasury notes to fixed-interest income investors at 13% in order to increase subscription levels at the main market auction held on Wednesday.
Spot rates and yields on government securities have had to be repriced as a result of limited market liquidity and interest rates that have crept up to 14% by 400 basis points. To offset their exposure to the growing inflation rate, investors are requesting higher rates. However, the naira has continued to decline along with the inflation rate.
The central bank’s spot rates on Treasury notes have been on the rise after interest rate increases that started in May as a result of new money pricing in the financial market. The Central Bank held a midweek auction to roll over notes worth N191 billion that were about to mature, but it was comparatively slow since a range of bid rates for long-term bills reached 17%.
Treasury notes with 91-day maturities worth N14.273 billion were made available for subscription, but just N1.67 billion was taken up by investors. The CBN ultimately distributed N1.546 billion at 6.467%.
According to auction findings, investors received mid-tenured Treasury notes at a rate of 7.90% while bid rates ranged between 7.9000% and 8.0000%. With a total subscription of N2.618 billion and an offer of N25.555 billion, the CBN distributed bills totalling N2.515 billion over a 182-day period.
The spot rate on 364-day bills increased to 13% as the interest rate increased to 14%, providing coverage for a 12-month inflation rate. The range of bid rates for the long-dated bills reported was between 6.9990% and 17%, according to traders’ notes. The apex bank allotted N30.756 billion at 13% for 364-day bills with a total subscription of N107.670 billion against N151.064 billion offered.
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