Yields on Treasury Bills To Spike At Auction on Higher Inflation Rate

Yields are expected to soar after the currency denominated treasury bills auction on Wednesday, April 20 in line with a higher inflation figure for March and possible rise in interest rates by the Central Bank at its meeting next month.

Nigeria plans to raise N167.51 billion ($845 million) in treasury bills with maturities ranging between 3 months and one year today.

“The expectation is that yields will be higher following the March inflation figure and policy direction from the Central Bank governor about proposed higher benchmark rates,” local unit of Citibank said in a note to clients on Wednesday.

Nigeria’s annual inflation rose to a near four-year high of 12.8 per cent in March from 11.4 per cent in February, driven by a rise in food prices.

Last month, the Central Bank rate-setting Monetary Policy Committee (MPC) raise its benchmark interest rate to 12 per cent from 11 per cent with indications that interest rate may be hiked again at the next MPC meeting on May 24.

The Central Bank sold the 3-month bill at 6.10 per cent at its last auction on April 6, the 6-month fetched 8.69 per cent while the one year paper fetched 9.48 percent.

At the secondary market, the 3-month paper closed at 7.25 per cent, 6-month traded at 8.99 per cent while the 1-year bill closed at 10.46 per cent.