THE Debt Management Office, DMO, has raised interest rates on treasury bills, TBs, by 340 basis points, bpts, at the backdrop of the Central Bank of Nigeria, CBN, tight monetary policy regime which increased the Monetary Policy Rate, MPR.
In a bid to tackle the persistent upward trend in the inflation rate, CBN raised the MPR, first by 150 bpts to 13 per cent on May 24, 2022 and again by 100 bpts to 14 per cent on July 19, 2022.
Vanguard findings show that DMO has steadily raised interest rates on Nigeria Treasury Bills, NTBs, auctions in a bid to accommodate the quest for higher interest rates triggered by the new policy stance of the apex bank.
The DMO sold N150.62 billion worth of NTBs two days ago, and findings from the result of the sales show that DMO raised the stop rate (maximum interest rate) on the 91-days and 182-days bills to 2.8 per cent and 4.1 per cent, respectively. The stop rate for the 364-days bills was, however, left at 7.0 per cent.
This week’s interest rate mark up is the third by DMO since May 24, 2022.
Consequently, DMO has raised the stop rate for the 91-days bills by 300 bpts from 2.5 per cent on May 25, while it raised the stop rate for the 184-days bills by 210 bpts from 3.89 per cent on May 25. The debt agency also raised the stop rate on the 364-days bills by 510 bpts from 6.49 per cent on May 25.
With this the average interest rate on NTBs shows a 340 bpts rise to 4.63 per cent at the auction held on Wednesday from 4.29 per cent at the auction held on May 25 a day after CBN’s first MPR raise.
Meanwhile, and in apparent response to the rise in interest rate, the NTB auction held on Wednesday recorded improved patronage as the amount of bills demanded by investors exceeded the amount offered by DMO by N56 billion or 21 per cent. This represents a 19.5 percentage increase when compared with the N2.2 billion or 1.5 per cent oversubscription recorded at the previous auction held on July 27.