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Investors have continued to show strong interest in Nigeria’s longer-dated treasury bills.
This was evident in the outcome of the Nigerian Treasury Bills auction held on Wednesday.
The Debt Management Office, on behalf of the Central Bank of Nigeria, offered N530bn in standard maturities to investors in the primary market. The breakdown included N50bn for 91-day bills, N80bn for 182-day bills, and N400bn for 364-day bills.
At the close of the auction, subscription for the 91-day bill was below the offer at N26.53bn, while the 182-day bill received N17.91bn. However, the 364-day T-bill continued to attract the highest demand, as seen in previous auctions.
The subscription for the 364-day bill reached a staggering N2.49tn, with a stop rate of 21.80 per cent. Overall, N756.01bn was allotted, with the largest portion allocated to the 364-day bill.
Explaining the sustained interest in the longer-dated instrument, the Managing Director of Arthur Steven Asset Management, Tunde Amolegbe, said, “This trend has been consistent in recent months, as it makes more sense to lock in funds for a longer period in a high-interest rate environment than to face reinvestment risk with short-term positions.”
He further suggested that the stop rate could signal a potential rate cut by the CBN’s Monetary Policy Committee.
He said, “The treasury bills market is indicating that we may see a rate cut from the MPC sooner rather than later. The FX market has been relatively stable recently, and inflation growth has slowed. This is reflected in today’s auction results, with the stop rate for the long-term bill at 21.80 per cent, compared to over 22 per cent in the previous auction.”
In the secondary market, the average yield on Nigerian Treasury bills slipped slightly on Tuesday, driven by increasing demand for naira-denominated fixed-income assets.
Traders reported that yields declined by two basis points to settle at 25 per cent in the secondary market. There was also demand for the 6 March NTB, quoted at 23.00/22.80. Day-on-day, the average benchmark yield dropped by 2bps to 24.83 per cent.
