The increasing demand in the secondary market caused the average yield on Nigerian Treasury notes (NTB) to decrease to 22 percent. During last week’s well attended Treasury Bill auction, Apex Bank lowered the interest rate on one-year notes at the primary market.
In an effort to draw in foreign portfolio investors, the monetary authority continued to pursue balance, which resulted in spot rates priced higher at the belly and short ends of the curve.
The secondary market for Nigerian Treasury notes increased in the meanwhile. The average yield on T-bills fell by 18 basis points to 22% as a result of the buying enthusiasm that was evident. Unfulfilled demand from the midweek auction propelled the purchasing trend that subsequently permeated the secondary market.
In their separate market note, analysts said the average yield dipped by 19bps to 22.0% at the T-bills segment and contracted by 15bps to 20.8% at the OMO segment.
At the primary market auction conducted on Wednesday, the apex bank offered instruments worth N508.98 billion. The offer book split the amount into N331.01 billion for the 91D day bills at the short end, N9.30 billion for the 182day at the belly and N168.67 billion for the 365 day bills – to participants.
Cordros Capital Limited reported that the auction was hugely contested as the total subscription level settled higher at N1.59 trillion with more demand skewed towards the longer-dated bill which attracted N1.43 trillion – 90.1% of total subscription.
The auction closed with the CBN allotting instruments worth N638.98 billion. The breakdown showed that the CBN allotted N60.69 billion worth for the 91 day bills. The apex bank also sold 182 day bills worth N28.46 billion and N549.83 billion for the 365 day papers.
Auction results showed that stop rates on 91 day bills rose to 16.50% from 16.24%. Also, market priced 182 day bills at 17.45%, 45 basis points above previous rate of 17.00%. On the other hand, spot rate on 364 day bill dropped marginally to 20.69% from 20.70%.
