Nigeria sells N229.6bn T-bills at higher yields to lure investors

Nigeria sold a total of N229.63 billion worth of the short-dated Treasury bills at higher returns to try to lure foreign investors to participate at the debt auction after the regulatory bank hike the Cash Reserves Requirements (CRR) for banks to 27.5 percent from 22.5 percent.

The one-year treasury bills, where foreign investors were the main buyers were sold at a higher rate of 6.5 percent compared to 5.09 percent it was sold at the previous auction.

The rise in yields on the bills came after sustained declines in returns on government borrowing instruments at both bonds and treasury bills auctions.

Subscription for the bills at the auction stood at N263.15 billion as investors piled up demand for government borrowing instruments.

Details of the debt auction showed that a total of N125.20 billion of the 1-year debt was sold compared with N263.15 billion demand received.

A total of N54.59 billion of the 6-month Treasury bills was sold at 4.50 percent yield compared with 3.95 percent at the last auction.

Also, N49.84 billion worth of the 3-month Treasury bills was sold at 3.50 percent against the 2.95 percent previously.

Analysts said the increase in yields may not be unconnected with the measures put in place by the Central Bank of Nigeria (CBN) to manage liquidity in the banking system.

Fixed income dealers said the market opened up at about N400 billion on Wednesday and had expected strong demand at the debt auction.

-Global Financial Digest