Auction: Interest Rate on Nigerian Treasury Bills to Rise –Firm
Following a surprise increase in the Nigerian Treasury bills rate and revised auction offers for December, the market now anticipates 1 year rate to increase as the authority is set to float an ad hoc auction on Wednesday.
Investment firm AAG Capital Limited, in a note, projected a higher spot rate for Nigerian Treasury bills with 364 days to maturity ahead of the midweek auction.
The firm made the projection ahead of Central Bank of Nigeria (CBN) ad hoc treasury bills auction that will be floated for subscription with N750 billion offer size.
At an auction conducted last week, the CBN floated N700 billion across standard maturities -91 days, 182 days and 364 days but total subscription came in below N750 billion.
Against expectation, the authority increased spot rate on Treasury bills with 364 days maturity by 146 basis points to 17.50%; this action stoked sell pressures in the secondary market.
The authority introduces an ad hoc auction that was not part of its initial plan for December and also increases the final auction size for the year to N700 billion.
With the persistent bearish sentiment in the secondary market, driven by the recently revised Treasury bills auction calendar with a larger offer size, AAG Capital Limited expects this to exert upward pressure on yields.
The firm said consequently, the 1Y stop rate is likely to print higher at tomorrow’s auction. #Auction: Interest Rate on Nigerian Treasury Bills to Rise –Firm#
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