1 year NTBS stop rate ticks up from year’s low as CBN mops up N223.23bn

Following the conclusion of Central Bank Nigeria’s auction on Wednesday, stop rates on Nigerian 364-Day treasury bills rose marginally from year’s low.

The rates have declined 332 basis points year-long to push yields lower.

Stop rates are the maximum interest rate preferred by the central bank out of all bids received in an auction. In other words it is the maximum rate at which the apex bank is willing to sell its securities.

Although the yearlong trend has been southward, the 364-day paper cleared at 11.18 percent from 11.139 percent last auction.

The 182-day paper cleared at 10.6 percent from 10.75 percent. So far in 2019 the 182 Day rate has fallen 25 basis points.

On the other hand marginal rate on 91-day rose slightly to 9.75 percent from 9.74 percent on Wednesday, while year-to-date performance show a decline of 115 basis points.

Report from Chapel Hill Denham notes that CBN sold N223.23bn worth of bills to roll-over corresponding maturities Thursday. The auction was oversubscribed by 1.68x with most demand on the 91-day paper (1.71x).

Yields on 365-Day treasury bills have declined from 16.95 percent on 02 January to 12.53 percent as at 17 July.

Analysts at Lagos based merchant bank, Fsdh last Monday said they expect yields on NTB to drop further from the current level.

The trend of declining yields in fixed income assets according to the Fsdh analysts will provides opportunity for large companies and the government to borrow cheap.

“The secondary fixed income market was quiet today, trending slightly bearish following today’s primary market NTB auction,” analysts at Chapel Hill Denham noted.

Discount rates on benchmark NTBS rose marginally by 2bps to 10.71 percent, as a result of sell sentiments on mid-dtms (+10bps to 11.05%).

However, rates closed flat on the short and longer dated DTMS at 9.95 percent and 11.02 percent respectively.