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Demand for FG Treasury bills surge, yields drop

By BusinessNews Staff on May 24, 2014

Demand for the Federal Government’s short-term debt surged at an auction on Wednesday, driving yields down 1.43 percentage points on average across maturities, as subscription rose more than four-fold the amount sold.

However, the Central Bank of Nigeria stuck to its initial offer.

According to a Reuters report, the Federal Government received N520.7bn ($3.2bn) in subscriptions for Treasury bills ranging from three-month to one-year maturities.

The CBN had offered N121.32bn worth of the debt notes, and strong demand from local pension fund and assets managers pushed down yields across the board.

Dealers said demand for the debt notes was heavy due to a large amount of liquidity in the banking system and offshore investors hunting for yields with the one-year note receiving bulk of the subscription.

The bank sold N40.6bn in the 91-day paper at 10 per cent returns, compared with 10.5 per cent at the last auction on May 7.

It sold N25bn in the 182-day bills at 10.01 per cent against 11.24 per cent at the previous auction, while a total of N55.68bn was sold in the one-year Treasury bill at the rate of 10.12 per cent compared with 12.7 per cent previously.

[Punch]

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