Nigeria Sells Treasury Bills to Investors at 19% After Spike in Demand

By Dipo Olowookere

Investors purchased Nigerian treasury bills at 19.00 per cent at the primary market on Wednesday, details from the exercise obtained by Business Post have revealed, indicating that the benchmark interest rate could be raised from the current 18.75 per cent when the Monetary Policy Committee (MPC) meeting is held later this month.

The Central Bank of Nigeria (CBN), on behalf of the federal government, through the Debt Management Office (DMO) auctioned T-bills at the primary market yesterday.

The debt instruments came in their usual three tenors on Wednesday, with N1 trillion on offer, this newspaper gathered.

The worth of the 91-day bill offered for sale was N200 billion; the same for the 182-day bill, while the 364-day bill was N600 billion.

However, the short- and mid-dated instruments were undersubscribed by investors, while the long-dated paper witnessed a strong demand.

According to the results of the exercise, traders stake N1.9 trillion on the one-year treasury bill at the PMA, with the range of bids between 13.00 per cent and 29.94 per cent. However, about N908.8 billion was allotted by the central bank to successful bidders at 19.00 per cent, higher than the 11.54 per cent it cleared at the preceding PMA by 7.46 per cent.

A look at the result of the six-month bill showed that investors offered N76.8 billion with a range of bids between 4.00 per cent and 19.98 per cent, but only N51.4 billion was allotted at 18.00 per cent, which is 10.85 per cent higher than the 7.15 per cent it cleared at the previous exercise.

The three-month instrument received subscriptions valued at N39.9 billion during the sales and a range of bids between 7.00 per cent and 17.20 per cent. However, N39.9 billion was sold at 17.24 per cent versus the 5.00 per cent it was offered by the central bank at the last auction, indicating a 12.24 per cent hike.

Analysis of the exercise showed that the apex sold slightly above the N1 trillion it offered for sale yesterday by N100 million after getting bids valued at N1.983 trillion.