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The Central Bank of Nigeria (CBN) increased spot rates on Treasury bills by 100 basis points in the latest primary market auction, according to the results. Despite solid demand for treasury instruments with a bid-to-offer ratio of 5.8x, the CBN allotted only N561.71 billion out of the N211.71 billion offered across standard maturities (91-day, 182-day, and 364-day).
The CBN raised stop rates by 100 basis points for the 91-day and 182-day bills, settling at 8.00% and 12.00%, respectively, while keeping the rate on the 364-day bills at 16.75%. The average yield remained unchanged at 12.7%, and trading activities in Nigerian Treasury bills cooled as market participants focused on the primary auction.
Despite expectations of a further decline in financial system liquidity due to near-zero maturing instruments, the average yield across the curve remained flat at the short and mid segments but contracted by 1 basis point at the long end. The average yield in the OMO bill segment decreased by 1 basis point to 14.7%, while the FGN bonds secondary market saw a flat average yield of 15.9%.
Data from FMDQ indicated increases in the open repo rate (OPR) and overnight lending rate (OVN) by 0.90% and 1.34% to 23.83% and 25.17%, respectively. Despite an inflow from FGN bond coupon payments worth N9.44 billion, the overnight lending rate expanded by 133 basis points to 25.2%.
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