The Central Bank of Nigeria will auction Nigerian Treasury bills worth N700 billion on Wednesday, signalling a possible further increase in stop rates following recent bond repricing in the fixed income market.
Auction details show that the apex bank will offer N100 billion in 91 day Treasury bills, targeting investors with a three month investment horizon. It will also sell N150 billion worth of 182 day bills for investors seeking a six month tenor.
Due to strong demand for longer dated instruments, the CBN plans to offer the largest portion of the auction in the 364 day segment. A total of N450 billion will be issued in one year Treasury bills aimed at investors looking to lock in returns over a longer period.
In its most recent offer, the CBN raised the spot rate on the 364 day Treasury bills to 17.95 per cent from 16.04 per cent, marking a sharp repricing within a two week period. This adjustment occurred despite expectations of easing inflationary pressure.
Spot rates on shorter tenors were also elevated, with 91 day bills printing at 15.30 per cent and 182 day bills priced at 15.50 per cent.
Market participants expect rates could rise further at the midweek auction, following similar adjustments at the bond market earlier in the week. At the bonds auction on Monday, the Debt Management Office increased stop rates on reopened five year and seven year bonds by 1.30 percentage points each.
The rate hikes came even after the National Bureau of Statistics reported a decline in headline inflation to 14.45 per cent, suggesting that investor demand and liquidity conditions continue to influence pricing in the fixed income market.
Analysts say the recent repricing indicates a market positioning for tighter financial conditions as 2025 approaches its end, with investors demanding higher yields across both Treasury bills and bonds.
