Nigerian Treasury bill yields declined to the lowest in more than six weeks at an auction yesterday, with bids being made for more than threefold the 95.6 billion naira ($590 million) put on sale.
The Central Bank of Nigeria sold 30.159 billion naira of 91-day bills at a yield of 13.75 percent, the Abuja-based central bank said today in an e-mailed statement, the lowest since the May 25 sale. The bank sold 65.403 billion naira of 182-day securities at 14.88 percent, also the lowest since May 25,. Bids totalled 290 billion naira.
“We interpret the excess of bids over actual paper sold as reluctance on the part of government to pay such high rates for borrowing,” Alan Cameron, analyst at London-based CSL Stockbroker Ltd., said in an e-mailed response to questions. “To the extent that demand was not met at primary auction, we expect it to appear in the secondary market today, driving down yields.”
The central bank held the benchmark interest rate at 12 percent this year to curb the naira’s decline and combat inflation, after raising it 5.75 percentage points in 2011.
While inflation slowed to 12.7 percent in May from 12.9 percent in April, the rate is set to peak at 14.5 percent in the third quarter, the highest since April 2010, according to the central bank.
An additional 21.8 billion naira of 91-day bills and 20 billion naira of 182-day debt were sold to non-competitive bidders, according to the central bank.
“I think it is fair to assume a certain level of foreign interest at yesterday’s auction, although they typically prefer the long end of the treasury bills curve,” Alan said.
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