Demand for Nigerian T-bills surge, yields drop

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 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.