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Treasury Bills Yields Rise On Central Bank Action

By on July 27, 2012

Treasury Bills Yield

Nigeria sold 207.3 billion naira ($1.3 billion) of Treasury bills at an auction yesterday, with yields rising from a previous sale after the central bank said it increased lenders’ reserve limits.

The Central Bank of Nigeria sold 34.9 billion naira of 91- day bills at a yield of 13.94 percent, 19 basis points more than at an auction on July 11. It also sold 60 billion naira of 182- day securities with a yield six basis points higher at 14.94 percent and 60 billion naira of 364-day notes at 14.966 percent.

The central bank said on July 24 it increased the amount of cash as a percentage of deposits that commercial banks must hold with the regulator to 12 percent from 8 percent and kept itsinterest rate unchanged at 12 percent to combat inflation and support the naira. Inflation accelerated to 12.9 percent in June, from 12.7 percent in May, the Abuja-based National Bureau of Statistics said July 18.

“The unexpected increase in the Cash Reserve Requirement ratio to 12 percent from 8 percent, resulted in a sharp increase in yields at the short end,” Samir Gadio, an emerging-markets strategist at Standard Bank Group Ltd. in London, said in an e- mailed reply to questions today.

An additional 9.1 billion naira of 91-day bills, 25.3 billion naira of 182-day debt and 18 billion naira of 363-day securities were sold to non-competitive bidders, while total bids at the auction amounted to 448 billion naira, according to the central bank.