One year T-Bill hits record high of 28.36% on interest rate hike

Investors flocked to Nigeria’s one year Treasury Bill as its yield hit 28.36 percent, the highest this year fueled by interest rate hike at the Wednesday auction.

This was a 0.86 percent increase from 26.96 percent at the last auction and higher than 26.01 percent yields that have been since March.

The stop rate for the one-year NT-Bills hit a record 22.1 percent at this auction.

The increase in yields have further narrowed the gap in real return on the NT-Bills to a negative of 5.83 percent from a negative of 7.23 percent at the last auction.

The stop rate on the risk-free instrument is well below July inflation rate of 34.19 percent as Price pressures remained prevalent in Nigeria.

Read also: Rate on one year treasury bill dips despite further rate hike

The CBN sold N258.4 billion worth of the one-year T-bill which was higher than the amount offered as it was oversubscribed by 38 percent to the tune of N354.4 billion.

On Tuesday the MPC increased the Monetary Policy Rate (MPR) by 50 basis points to 26.75 percent from 26.25 percent.

Since the appointment of Yemi Cardoso as the CBN Governor, MPR has been raised by 800 basis points so far from 18.75 percent to 26.75 percent at the close of the third meeting of the year.

The effect of the hike was seen across the board as the yields at Wednesday’s auction were higher than that of the previous auction before the rate hike.

Yields 91-day and 182-day T-Bills also spiked up to 19.41 percent and 21.61 respectively from 17.00 and 19.11 percent.

The CBN sold less than the auctioned amount on the short and medium terms as they were undersubscribed by investors.

At the auction yesterday the CBN sold N13.14 billion worth of its 91-day T-bills, the same amount of subscription it saw despite offering N16.48 billion.

While the N6.40 billion of the 182-day NT-bills was sold.

Overall CBN sold a total of N280 billion worth of bills compared to N277.96 billion offered at the Primary Market Auction across the 91-, 182-, and 364-day tenors.