Alpha Seekers Bet N2.24Trn on Treasury Bills
The Central Bank of Nigeria (CBN) refused large Treasury bill demand by local investors in its latest primary market auction.
Alpha seeking investors double down bet on local borrowing instruments after debt office failed to raise N2.5 trillion at primary market auction.
In the secondary market, the average yield on Treasury bills rose sharply due to selloffs, traders said in their separate market updates.
The benchmark yield climbed by 119 basis points following risk-off sentiment on the Nigerian bills driven by lower liquidity in the financial system.
The reduced liquidity in the financial was attributed to debits from recent treasury bills and FGN bonds auction sales. Ahead of the central bank auction last week, investors switched to selling down their investment holdings in treasury instruments.
At the auction, the CBN offered instruments worth N265.50 billion to market participants. The offer was split into N11.96 billion for the 91-day, N10.21 million for the 182-day and N243.33 billion for the 364-day.
Investment firms reported that demand at the auction was higher than the previous primary market auction as investors sought a safe haven to park their funds amidst multiple pressures in the economy.
CBN auction result showed that total subscription level settled at N2.24 trillion, more than 13% above N1.98 trillion demand registered at the previous auction.
The auction ended with the CBN allotting bills worth N1.59 trillion. The apex sold N331.01 billion for the 91-day, N66.25 million for the 182-day and N1.19 trillion for the 364-day.
Details showed that the stop rate for 91-day bills settled at 17.00% from 17.24%, which is 24 basis point reduction from the previous auction. The spot rate for 181-day bills was 18.00%, which was a 50 basis points increase from 17.50% while spot rate on 364-day bills steadied at 19.00%.
In the secondary market, average yield increased by 119bps to 16.7% in the NTB segment but declined by 6bps to 17.8% in the OMO bills secondary market, according to Cordros Capital Limited.
Analysts anticipate higher demand for instruments in the Treasury bills secondary market following expectation of surplus liquidity in the financial system. Thus, we believe yields in the market would likely trend lower. #Alpha Seekers Bet N2.24Trn on Treasury Bills
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