Nigerian T-Bills Rate Surges To 13.97%

LBS Discloses FG's Targets With Naira Redesigning

In spite of a large increase in subscription levels at the primary market auction sales held by the monetary authority on Wednesday, the spot rate on 364-day Nigerian Treasury Bills (NTB) rose to 13.97%.

At the central bank’s primary market auction on Wednesday, investors in fixed income securities bet N154 trillion on Nigerian Treasury notes. The sum was more than three times the N303 billion in maturing notes that the apex bank refinanced in order to control the system’s liquidity level.

Despite a strong subscription level and a negative interest return on naira assets in the fixed income market, the CBN allocated N303.21 billion at the auction. The total subscription of N1.54 trillion for the auction sales results in a bid-to-offer ratio of 5.1x.

However, the average stop across the 3 tenors on offer increased by 215 basis points, according to CardinalStone Securities Limited. In reaction, the secondary market was cold with pockets of transactions as pressures mounted on financial system liquidity.

This pushed short-term benchmark rates in the money market higher. A development that forced local deposit money banks visit to the CBN standing lending facility to raise funds.

Money market rates, such as the open repo rate increased by 26 basis points to 24.06%. The overnight lending rate stayed steady at 24.75%, according to data from the FMDQ Exchange platform.

CBN auction result showed that 91-day spot rate surged by 19 basis points to 5.19%, 182-day was priced at 8%, representing a 200 basis points increase and 364-day T-bill was closed at 13.97% from 9.80%.

Compared with the previous auction, demand for T-bills actually declined as evidenced by the lower bid-to-cover ratio of 5.09x versus 5.43x subscription level reported in the previous auction, Cowry Asset said in its market update.

The investment firm said nonetheless, the average secondary market yield on T-bills was unchanged at 8.28% as investors switched attention to auction proceedings.

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