Treasury bill sale pushes interbank rate to 12%

The Central Bank of Nigeria (CBN) sold about N400 billion ($1.27 billion) of Treasury bills on Friday, lifting the interbank lending rate up to 12 percent, traders said.

The bank sold N82 billion in 181-day Treasury bills at 18 percent and N309 billion at 18.6 percent, mopping up liquidity from the money market and pushing up the cost of borrowing among commercial lenders.

“We have some major players quoting about 20 percent for overnight placement, but most takers are not willing to borrow at that rate,” one dealer said, adding that the rate eventually settled around between 10 percent and 12 percent at 1328 GMT.

Markets had opened on Thursday with a surplus liquidity of about N467 billion due to an injection of matured Treasury bills until the central bank later debited banks for the purchases of 302.4 billion in primary market Treasury bills.

Traders said the central bank on Friday further moved to reduce liquidity with the sale of open market operations bills, which fetched returns above the inflation rate.