DMO sells over N693 billion T-bills, up by 51.8 per cent

The Debt Management Office (DMO) sold Treasury bills valued at N693.05 billion across its auctions in November 2024, representing a 51.8 per cent month-on-month (MoM) increase when compared to N456.6 billion sold in October 2024.

Similarly, the DMO also sold bonds worth N346.2 billion in November 2024.

According to FMDQ Securities Exchange, this also represented a 19.5 per cent MoM increase compared to N289.6 billion realised in October 2024.

The exchange noted that sovereign securities offered by the DMO in its FGN Bond and T-bills auctions were oversubscribed by 207.9 per cent and 92.7 per cent respectively.

The FGN bond and treasury bills markets experienced a significant yield rise in 2024.

The average yield in the FGN bond market increased from 14.13 per cent on the first trading day of the year to 19.5 per cent in November.

Analysts attributed the rise to the unprecedented hike in the monetary policy rate by 850 basis points so far in the year to 27.5 per cent, thereby pushing up yields across markets.

Also, the successful issuance of FBN bonds is due to attractive yields and investors’ appetite for long-term investment.

Under the current administration, the Central Bank of Nigeria (CBN) Monetary Policy Committee (MPC) has implemented six interest rate hikes to cool inflation, which currently stands at 40 per cent.

The first increase raised the rate from 18.75 per cent to 22.75 per cent, followed by subsequent hikes to 24.75 per cent and 26.25 per cent.

Similarly, in July 2024, a 50-basis point increase brought the rate to 26.75 per cent. Also in September, the MPC implemented another 50-basis point hike, raising the rate to 27.25 per cent. In November 2024, the CBN raised its interest rate again, increasing it by 25 basis points from 27.25 per cent to 27.5 per cent.

Vice President of Highcap Securities, David Adonri said: “Debt instruments take a cue from the benchmark rate which is MPR. As MPR rises, the yield on all interest-bearing financial instruments rises. This accounts for the rising yield on TBs and FGN bonds.”

The CBN issues treasury bills twice a month to help the Federal Government fund its budget deficit, support banks in managing liquidity and curb inflation.

Also in November 2024, the CBN sold bills worth N905.2 billion, representing a 23.8 per cent uptick from N731.1 billion sold in October 2024.

During the period, there were no new listings or redemptions of non-sovereign bonds on the FMDQ Exchange, leaving the total value of non-sovereign bonds outstanding at N2,240.3 billion.

In addition, the total value of CPs quoted on the FMDQ Exchange in November 2024 hit N77.5 billion representing an MoM increase of 153.4 per cent over the N30.6 billion quoted in October 2024.

Quoted CPs were issued by institutions from the financial services, agriculture, manufacturing, health and real estate sectors.

Also, the outstanding value of CPs declined by 7.02 per cent MoM, settling at N525.6 billion in November 2024.

This decrease was primarily driven by the maturity of N117.2 billion worth of CPs during the review period.

In the fixed-income market, turnover within the period hits N17.9 trillion, representing a MoM increase of 79.5 per cent from the N10 trillion turnover recorded in October 2024.

The MoM increase in turnover was driven by the increase in T.bills, Other Bonds, OMO Bills, and FGN Bonds transactions during the review period.

For the FX Derivatives Market, total turnover in the segment within the period stood at N0.81 trillion representing a MoM decrease of 82.4 per cent from October 2024 $2.76 billion figures.

The MoM decrease in the FX derivatives turnover was driven by the 85.5 per cent and 34.06 per cent decline in FX Swaps and FX Forwards transactions, respectively during the period.