Treasury Bills Extend Rally as Sell-off, new Issues Weigh

Yields on Nigeria’s mid-dated treasury bills rose nearly 1 percentage point to 12 percent on Friday, extending a three-day rally as a sell-off which started this week continued, traders said.

The Debt Management Office (DMO) repaid 131.42 billion naira ($429.13 million) worth of treasury bills on Thursday instead of rolling them over, thereby slightly reducing its debt and debt-servicing costs for the government.

It also plans to repay 66.62 billion naira on Dec. 21.

The bills issued as one-year but with between 160- and 220 days to maturity rose 80 basis points on Friday as investors booked profits, traders told Reuters.

The one-year yield has been volatile recently, caught between local demand and foreign investors pulling money out of the country, all amid speculation about the outlook for official interest rates.

The one-year treasury bill rose about 100 basis point to 10 percent on Wednesday after it dived to 7 percent the previous day.

The DMO released a debt auction calendar for the first quarter on Friday showing a plan to raise a total of 1.08 trillion naira ($3.5 bln) in treasury bills including those to be rolled over.

The auction calendar showed that there would be more bills hitting the debt market between January and March, adding some pace to the sell-off as investors booked profits now to take position ahead of the auction, traders said.

The DMO has said it wanted to raise Eurobonds or syndicated loans for $3 billion to redeem part of a local treasury bill holding worth 2.7 trillion naira ($8.8 bln).

Nigeria sold $3 billion worth of Eurobonds last month, out of which $2.5 billion is to part-finance 2017 budget deficit and the balance for the refinancing its domestic debt.