Interest rates for long-term investments climbed to 20.65% at the recent primary market auction (PMA) conducted by the Debt Management Office (DMO) on behalf of the monetary authority, according to traders.
The DMO successfully refinanced N374.67 billion in maturing Treasury bills during the auction on Wednesday. Despite tight liquidity in the financial markets, demand remained robust, surpassing expectations.
Notably, the 364-day Treasury Bills experienced strong investor interest, with bids totaling N460.4 billion against the N349.54 billion offered. The stop rate for the one-year bills increased from 19.86% to 20.65%, reflecting heightened demand.
Meanwhile, the shorter-term 91-day and 182-day Treasury Bills maintained their previous stop rates at 17.00% and 17.50%, respectively, according to Alpha Morgan Capital Limited. Both tenants were oversubscribed, with the DMO allotting the total amount offered for each.
For the 91-day bills, the DMO offered N13.14 billion but received N16.85 billion in demand, ultimately selling the entire amount offered. Similarly, for the 182-day bills, N11.99 billion was offered, while demand reached N12.58 billion, with N9.36 billion worth of bills being sold.
The 364-day bills saw the most significant activity, with the DMO offering N349.54 billion and selling N352.17 billion, following an oversubscription of N460.4 billion.
In the secondary market, Treasury bills traded with bullish sentiment, pushing the average yield down by 4 basis points to 24.1% on Wednesday, coinciding with the PMA.
Cordros Capital Limited, in its market update, reported that average yields declined across short (-4 bps), mid (-5 bps), and long (-3 bps) segments. This contraction was driven by strong demand for bills with 65, 175, and 212 days to maturity, which saw declines of 15, 54, and 17 basis points, respectively.
However, in the Open Market Operation (OMO) segment, yields rose, with the average rate expanding by 59 basis points to 26.4%.
