CBN Sells Nigerian Treasury Bills at 13% to Investors
Central Bank of Nigeria (CBN) sold long-dated Treasury bills at 13% to fixed interest income investors in order to attract higher subscription levels at the primary market auction conducted on Wednesday according to results obtained by MarketForces Africa.
Tight market liquidity and interest rate which has inched upward by 400 basis points to 14% has forced spot rates and yields repricing on government instruments.
Investors are requiring higher rates to cover their exposures to rising inflation rate. However, not only that inflation rate has worsened, naira has continued to depreciate.
After interest rate hikes that began in May, the apex bank’s spot rates across Treasury bills have been making an uptrend following fresh money pricing in the financial market.
The Central Bank’s midweek auction was conducted to roll over maturing bills worth N191 billion, however, it was relatively cold as a range of bid rates hit 17% for long-tenored bills.
Treasury bills with 91-day tenored worth N14.273 billion were offered for subscription but investors only booked for N1.67 billion. Eventually, the CBN allotted N1.546 billion at 6.467%.
Mid-tenored Treasury bills were allocated to investors at 7.90% while a range of bids rates was between 7.9000% and 8.0000%, according to auction results. For 182-day, CBN allotted Bills worth N2.515 billion on the back of N2.618 billion total subscription; against N25.555 billion offered.
As interest rate inched to 14%, the spot rate on 364-day bills has inched upward to 13%, providing 12-month inflation rate coverage to naira assets in the fixed income segment.
The range of bid rates for the long-dated bills reported was between 6.9990% and 17%, according to traders’ notes.
The apex bank allotted N30.756 billion at 13% for 364-day bills with a total subscription of N107.670 billion against N151.064 billion offered.- Marketforces.
