Yields climbed higher at Nigeria's short-dated Treasury bill auction on at the weekend following the increase in the benchmark interest rate by the Central Bank of Nigeria (CBN), Reuters has said.
Reuters revealed that the CBN sold a total of N201.82 billion ($128 billion) in 91-, 182- and 364-day treasury bills at its regular auction with yields reflecting the 275 basis points increase in the monetary policy rate to 12 per cent last Monday.
It sold N70.15 billion in the 91-day bill at 15 per cent marginal rate, N63.49 billion in 182-day paper at 16 per cent, and N68.18 billion in the 364-day bill at 16.22 per cent.
The papers were sold at a lower marginal rate at the last auction in September with the 91-day paper attracted 10.23 per cent, 182-day at 10.85 per cent and 364-day at 11.24 per cent.
Traders said the higher-than-expected rise in yield on the treasury bills led to the shorting of the bond market on Thursday as longer maturities were unable to compete. Total subscription stood at N224.04 billion compared with the N110 billion demanded at the previous auction.
The CBN had raised the Monetary Policy Rate (MPR) - benchmark interest rate - from 9.25 per cent to 12 per cent, representing an increase of 275 basis points. It had also increased the cash reserve ratio (CRR) to 8 per cent from 4 per cent. The MPC had also decided to reduce the net open position (NOP) to 1 per cent of shareholder funds from 5 per cent.