Nigerian Treasury bill (T-Bills) curve jumps 27 basis points on Thursday to close at 5.78% as investors displayed a huge appetite for 364-day tenor at the Central Bank (CBN) auction yesterday, Chapel Hill Denham said in a note.
At the T-bills auction that was held yesterday, the CBN auctioned N24.2 billion (91-day), N19.2 billion (181-day), and N19.8 billion (364-day) worth of treasury bills.
According to analysts at Chapel Hill Denham, the 91-day and 181-day bills were significantly undersubscribed as investors displayed a huge appetite for the 364-day bill.
The latter was oversubscribed by N266.7 billion while the auction cleared at 2.5% (91-day), 3.5% (181-day), and 9.65% (364-day). Chapel Hill Denham’ analysts said this was similar to the previous stop rates, except for the 364-day which cleared 10bps lower.
T-Bill Rate Jumps as Market Records Huge Appetite for 364-Day Tenor
It was however noted that sentiments in the fixed income market were mixed on Thursday. Investors were bearish in treasury bills holding and the benchmark curve expanded by 27bps to close at 5.78%.
Meanwhile, the open market operations (OMO) benchmark curve shrank by 14 basis points to close at 8.95%, with some bullish interest on the short end of the curve. Fixed income analysts said the bond market traded almost flat, closing at 13.37%.
Also, financial system liquidity continued to improve this week from a deficit of N293.7 billion on Wednesday to N74.10 billion on Thursday.
This was driven by a significant reduction in activities in the Standing Lending Financing (SLF) window and increased activities in the Standing Deposit Financing (SDF) window. Consequently, the open buyback and the overnight rates dropped by 50 basis points each to close the day at 13.0% and 13.5% respectively
In related development, the Nigerian local currency, naira gained in the Investors and Exporters window by 0.12% or 12kobo on Thursday while in the parallel market, it shed 1.62% or N1.62.
The decline in the parallel market is linked to arbitrage activities in which traders are creating artificial scarcity of the United States dollar in reaction to the convergence of the official and NAFEX rate on the CBN website.