The 364-day treasury bill stop rates have experienced a significant spike, reaching 19% per annum.
Gatekeepers News reports that this was the first clear indication that the central bank was moving towards a hawkish monetary policy. The 182-day and 91-day bills also rose to 18% and 12.2%, respectively.
This rate hike is considered a significant move in monetary policy aimed at tackling the depreciation of the naira and reducing excess money supply to curb the rapidly increasing inflation.
To put the rate hike into perspective, at the last auction on January 29th, the interest rates for these maturities were recorded at 5% for the 91-day bills, 7.15% for the 182-day bills, and 11.54% for the 364-day bills.
Gatekeepers News earlier reported that the apex bank was likely to offer higher interest rates for treasury bills as a way to combat the depreciation of the naira.
During the latest auction, a total of N1 trillion was on offer, but the demand was extremely high, with investors staking N2.3 trillion. The one-year bill on offer for N600 billion recorded a massive N1.8 trillion subscription, out of which the central bank sold N908.7 billion.
See a breakdown of the offer below:
91 days – Investors staked only N39.9 billion for the 91-day bill compared to the N200 billion offered by the apex bank. The range of interest rates bid was between 7% and 17.2%. The central banks sold the N39.9 billion staked.
182 days – Investors also undersubscribed the offer, staking just N76.8 billion out of the N200 billion offered by the central bank. The central bank allotted only N51.3 billion. The range of bids was 4% to 19.9%. The stop rate was 18% for treasury bills.
364 days – The one-year bill witnessed a three-fold oversubscription of about N1.8 trillion compared to the N600 billion that was on offer. The apex bank allotted N908.7 billion with stop rates of 19%. Investors bid between 13% and 29.9% as interest rates.
