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The Central Bank of Nigeria (CBN) almost doubled Treasury Bills sales in the month of March, raising a whopping N2.82 trillion. The figure represents an increase of Treasury Bills sales by 95%.
According to a report by Dmarketforces Africa, the amount raised by the CBN in the month of March, showed an aggressive mopped up of liquidity from the local Treasury Bills (NTB) in the primary market auctions.
The CBN raised more than N2.8 trillion in the just concluded month, putting pressures on iqudity conditions in the money market as banks, other institutional investors ramped up bets on government instruments.
In the secondary market, trading activities began on a cautious note, with mixed sentiments as participants adjusted their portfolios ahead of the auction. The Treasury Bills market started on a quiet note, with weak demand and cautious buyer sentiment before midweek auction. On Thursday, post-auction bearish sentiment dominated transactions in the secondary market, hitting mid-dated papers the hardest.
Notably, the 8-Jan maturity saw the largest yield decline (-10 bps), while the 4-Sep bill recorded the steepest increase (+102 bps). Selling activity was concentrated on the long end, particularly the newly issued 1-year bill, while the 18-Sep NTB saw limited interest.
Across the market segments, the average yield advanced by 15 bps and 168 bps to 19.4% and 24.2% in the NTB and OMO segments, respectively. In March, N2.82 trillion was raised from Nigerian Treasury bills via the primary market, marking a 95.42% increase from February’s N1.44 trillion.
On behalf of the monetary authority, the Debt Management Office (DMO) sold N808.73 billion worth of Nigerian Treasury bills across standard maturities. The allotment made to investors exceeded N700 billion offer put forward at the auction by 16% as demand for naira assets remained upbeat.
The amount in offer was split as N80.00 billion for the 91-day bills, N120.00 billion for the 182-day bills, and N500.00 billion for the 364 bills. Results showed that total subscription level settled higher at N1.43 trillion as against N902.04 billion demand level seen at the previous auction.
Reflecting their preference for long dated assets, demand for 364-day paper accounted for 92% of the total allotment. The auction result translated to bid-to-offer ratio of 2.0x as against 1.1x at the previous auction sales.
The auction closed with the DMO allotting N808.73 billion—N38.65 billion for the 91-day, N24.27 billion for the 182-day, and N745.80 billion for the 364-day papers. Stop rates for 91-day and 182-day papers were unchanged at 18.00% and 18.50%, respectively. However, the spot rate for 364 days fell to 19.63%, down from 19.94%.
Source: Dmarketforces Africa
