Treasury Yield Rises as CBN Hikes Rate on 364-Day Bills

The average yield on Nigerian Treasury bills climbed to 24.1% due to sell pressure in the secondary market as the Central Bank (CBN) repriced discount or spot rates at the primary market auction.

Last week, the Debt Management Office (DMO) conducted main auction for treasury bills on behalf of the Apex Bank which is saddle with liquidity management responsibility.

At auction, the CBN offered Treasury bills worth N489.8 billion, outpacing maturity during the week by N115.1 billion: a slew of investment firm said in their notes. 

Total subscription was strong as market participants seek investment options to park fund and optimise portfolio return.  The auction closed with the DMO allotting exactly what was offered.

Afrinvest Limited said despite varying yield expectations, demand was healthy, particularly at the short and mid tenor as bid-to-offer ratio cleared at 1.3x and 1.0x respectively.

For 91-day bills, the CBN offered N13.1 billion worth for subscription but received N16.9 billion as total bid and then sold N13.1 billion at 17%.

CBN also offered N12 billion worth of 182-day bills for subscription but investors staked N12.6 billion on mid-tenor while the CBN sold N9.4 billion at 17.5%.

364 day Treasury bills worth N349.5 billion was offered for subscription but investors bet N460.4 billion on the long tenor while the CBN allotted N352.2 billion at 20.65%, up by 79 basis points.

In the secondary T-bills market, trading activities was bearish as average yields across tenors advanced 76 basis points week on week to 24.1%.

The long-term instruments recorded the most sell offs. Trailing, the mid and short-term segments of the yield curve expanded by 12bps and 10bps week on week respectively to 26.6% and 22.0%.

Analysts said they expect bearish sentiment to persist in the secondary market segment due to expectations of short -term bearish repricing, owing to weak inflation and interest outlook.

Likewise, the average yield increased by 18 basis points to 26.1% in the OMO bills segment, according to Cordros Capital Limited. #Treasury Yield Rises as CBN Hikes Rate on 364-Day Bills

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