Demand for Nigerian 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, but the central bank stuck to its initial offer.
Nigeria received 520.7 billion naira ($3.2 bln) in subscriptions for Treasury bills ranging from 3-month to one-year maturities. The central bank had offered 121.32 billion naira 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 1-year note receiving bulk of the subscription.
The bank sold 40.6 billion naira in the 91-day paper at 10 percent returns, compared with 10.5 percent at the last auction on May 7.
It sold 25 billion naira in the 182-day bills at 10.01 percent against 11.24 percent at the previous auction, while a total of 55.68 billion naira was sold in the one-year treasury bill at the rate of 10.12 percent compared with 12.7 percent previously.
For those seeking to invest in TB’s 10% is still a good rate. However, it appears now is probably the time to lock in for 3 months to 6 year as rates may just continue to fall. Banks are probably not lending preferring to invest in safe government securities. Things may change again so 3 months may just be ok. I typically choose to invest for 6months (182days)