Nigerian Treasury Bills Rate Jumps to 5.50% as Demand Rises

January 13, 2022
Treasury Bills

By Dipo Olowookere

The stop rates of Nigerian treasury bills witnessed an increase at the primary market on Wednesday when the Central Bank of Nigeria (CBN) approached the market with N77.6 billion worth of the asset class.

As usual, the appetite of investors for the investment tool remained high and in order not to disrupt this, the apex bank decided to raise the rates.

According to details of the exercise, market participants staked N113.1 billion on the treasury bills offered in three different maturities.

However, much of the subscriptions were for the long end of the curve as the short and mid-tenors suffered low subscriptions.

Business Post reports that the 91-day bill received bids worth N2.5 billion of the N4.2 billion auctioned by the central bank, while bids worth N2.3 billion were received for the 182-day bill, lower than the N7.5 billion offered for sale.

But the 364-day bill recorded subscriptions valued at N108.3 billion, higher than the N65.9 billion brought to the market for sale.

In terms of the allotment, the CBN sold N2.2 billion for the three-month instrument, N1.5 billion for the six-month T-bills and allotted N53.9 billion worth of the 12-month bill.

From the analysis, the central bank only sold N57.6 billion worth of the treasury bills to traders at the primary market yesterday, significantly lower than what it intended to sell.

As for the stop rates, the apex bank raised the 91-day bill to 2.50 per cent from the preceding exercise’s 2.49 per cent, while the one-year bill cleared at 5.50 per cent compared with the previous PMA’s 4.90 per cent, with the 182-day tenor slashed to 3.44 per cent from 3.45 per cent.

From what happened yesterday, investors should be expecting another rate hike at the next exercise so as to further jerk up the hunger for treasury bills at the fixed income market in Nigeria, especially at a time inflation rate remains high in double figures.

Dipo Olowookere

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan.

Mr Olowookere can be reached via [email protected]

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