The average yield on Nigerian Treasury bills rose as investors in the secondary market profited from the rate hike. Sell side activity was observed throughout the Nigerian Treasury bill tenors as investors sought higher returns on naira assets due to rising interest rates and an inflationary environment.
Cordros Capital Limited reported a 45 basis point increase in the average yield across all instruments, to 25.1%, in its market update. Traders also noticed that the average yield in the Nigerian Treasury bills category jumped by 34 basis points, to 25.2%.
A similar selloff trend in the OMO bills category increased the average yield by 64 basis points, closing the week at 25.0%. Last week, the apex bank conducted a primary market auction for Treasury and OMO bills despite tight liquidity conditions in the financial markets.
At the Treasury bills auction, the Central Bank offered N227.54 billion across standard maturities to investors for subscription last week. The offer was split into N28.15 billion for the 91-day, N25.58 billion for the 182-day, and N173.81 billion for the 364-day bills, according to auction details
Analysts said aggregate subscription settled lower at N304.27 billion versus N563.17 billion demanded level seen in the previous auction, with a bid-to-offer of 1.3x. The CBN allocated exactly what was offered across standard maturities to investors. The spot rate on 91-day Treasury bills was priced higher to 17%, from 16.63%.
Auction results also showed that spot rate on 182-day bills was priced at 17.50%, up from 17.00% at the previous auction. One year Treasury bills was sold at spot rate of 20.00%, up from 18.59%.
Meanwhile, the CBN also conducted an OMO auction on Thursday, offering instruments worth N500.00 billion. The OMO auction was split across standard maturities as N75.00 billion for the 96-day, N75.00 billion for the 194-day, and N350.00 billion for the 362-day—to investors.
Details from the auction results showed that total subscription settled at N252.90 billion for the 362-day, while no demand was seen for the 96-day and 194-day tenors. Naira Rises against US Dollar Ahead of Sept. FX Auction
Eventually, the Central Bank allotted exactly the size of its offer to investors who sought to bet at a stop rate of 24.36%, up from 21.80%.
