CBN makes upward price review of Nigerian Treasury bills

The Central Bank of Nigeria (CBN) has made an upward price review on spot rates on Treasury bills by 100 basis points at the just concluded primary market auction.

The CBN offered N211.71 billion across the standard maturities, which included 91-day, 182-day and 364-day tenors at the auction.

Local investors remained bullish amidst a lack of alternative investment windows. The demand for treasury instruments came strong, recording 5.8x bid-to-offer.

However, in an effort to achieve liquidity mop-up, only N561.71 billion was allotted, according to an email sent by CardinalStone Limited to investors.

Closing the auction, the CBN increased stop rates across the 91-day and 182-day bills by 100bps apiece to settle at 8.00 percent and 12.00 percent, respectively. Meanwhile, the monetary authority kept the rate on 364-day bills at 16.75 percent.

Hence, trading activities on Nigerian Treasury bills ended cold because fund managers and other market participants shifted focus to the primary auction.

Thus, the average yield was unchanged at 12.7 percent amidst an expectation that the financial system liquidity would descend further due to near-zero maturing instruments in the market.

Across the curve, the average yield was flat at the short and mid segments but contracted at the long (-1bp) end as participants demanded the 337-day to-maturity bill. Due to this buying momentum, the long-dated bill yield declined by a basis point.

Meanwhile, the average yield pared by 1bp to 14.7  percent in the OMO bill segment. Similarly, the FGN bonds secondary market traded in a lull as the average yield closed flat at 15.9 percent.

Data from FMDQ showed that the open repo rate (OPR) and the overnight lending rate (OVN) increased by 0.90 percent and 1.34 percent to 23.83 percent and 25.17 percent, respectively.

The overnight lending rate expanded by 133 basis points to 25.2 percent, despite the inflow from FGN bond coupon payments worth N9.44 billion.