Investors Trim Treasury Bills Holdings as CBN Cuts Rates

Investors reacted negatively, trimmed their Nigerian treasury bills (NTB) holdings in the secondary market following successive spot rates cut at the Central Bank of Nigeria’s (CBN) primary market auction last week.

In a bid to attract foreign portfolio investors into the economy, the apex bank offered as much as 25% as a spot rate on one year Treasury bill instrument. The total subscription levels have continued to outpace the amount offered by the apex bank at various primary market auctions since the beginning of the year.

Due to changing market dynamics following the monetary authority interest rate benchmark hikes as part of coordinated efforts to combat inflation, yields on fixed interest securities have remained elevated.

This market condition has also spurred an increase investment securities from the local deposit money banks. Again, the spot rate on one year Treasury bills was cut to size following a heavy subscription record at the CBN auction last week.

During the treasury bills primary auction, the total amount offered was N44.23 billion as CBN sought to refinance maturing bills. However, analysts noted that the auction size was less than N221.17 billion worth of Nigerian Treasury bills sold at the previous auction.

Despite its small size, investors staked NGN407.76 billion, while the apex bank allotment settled at N55.23 billion. In the previous auction, total demand was N713.89 billion, while the CBN allotted NGN278.43 billion worth of Nigerian Treasury bills to market participants.

Subsequently, the stop rate for the 92-day, 182-day, and 364-Day instruments declined marginally to 16.30%, 17.44%, and 20.50% from 16.50%, 17.50%, and 20.67% in the previous auction respectively.

Last week, sentiment was mixed as the average treasury yield increased to 21.90% from 21.02% recorded last week, while the average bond yield remained constant at 18.76%. #Investors Trim Treasury Bills Holdings as CBN Cuts Rates Reforms: Fitch Revises Nigeria’s Outlook to Positive
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