NTB: High interest rate direction attracts +1119% oversubscription

Published by

1 year ago

THE recent high interest rate direction in Nigeria has attracted investors, leading to +1119 percent oversubscription of Nigerian Treasury Bill (NTB).

Although dealers said they expect investors to remain cautious in anticipation of March Inflation figures, at the NTB auction held on Friday, the Debt Management Office offered N150 billion and had a total subscription of N1.82 trillion.

The oversubscription was across the three tenors but highly concentrated at 364-day paper with N1.77 trillion subscription. The DMO allotted N952 billion with a distribution of N27.11 billion for 91-day, N22.67 billion for 182-day, and N902.04 billion for 364-day.

The stop rates on the 91-day and 182-day stayed unchanged at 16.24 percent and 17.00 percent, respectively, while the 365-day paper declined to 20.70 percent from 21.50 percent at the previous auction.

However, the average yield on Nigerian Treasury bills declined previous week as demand for short-term investment increase in the secondary market.

This plunge in yields on bills is lower ahead of inflation rate data for March, 2024. In the last reading, statistics office reported that headline inflation climbed to 31.70 percent.

The nation’s running inflation is however expected to cross 32 percent in March as subsidies and devaluation effects are yet to fizzle out.

In the secondary market, trading activities on Naira treasury bills was mixed, albeit with a bullish tilt, as the average yield pared by 1bp to 18.9 percent.

In its market update, Cordros Capital Limited said across the curve, the average yield contracted at the short (-2bps) and mid (-3bps) segment.

The yield contraction followed buying interests in the 80-day to maturity which lost -2bps and 171 day to maturity bills that lost 3bps respectively. At the long end of the curve, traders reported that yield closed flat. Elsewhere, the average yield declined by 16bps to 18.2 percent in the Open Market Operation (OMO) segment.

ALSO READ: Yoruba Nation: Gov Adeleke beefs up security in Osun