Nigerian T-Bill Yields Fall to 15-Month Low on Inflation Bets

Nigerian Treasury bill yields fell to the lowest in 15 months at an auction yesterday as bids were more than double the amount on sale amid speculation that inflation and interest rates will retreat this year.

The Central Bank of Nigeria sold 30.153 billion naira ($193 million) of 91-day bills at a yield of 11.55 percent, it said in an e-mailed statement, the lowest since the Sep. 29, 2011 sale. The regulator also sold 50.403 billion naira of 182-day bills at an 11.60 percent yield and 85.845 billion naira of 364-day notes at a yield of 11.79 percent. Bids totaled 360.2 billion naira, more than double the 166.4 billion naira on sale.

Nigeria’s inflation rate rose for a second month in November to 12.3 percent from 11.7 percent, as the worst floods in decades cut farming output, the National Bureau of Statistics said Dec. 17. The impact of the floods will probably boost inflation before price pressures begin easing early this year, central bank Governor Lamido Sanusi said on Nov. 20, after leaving the benchmark interest rate unchanged at 12 percent.

The auction results “are driven by expectations of lower inflation and interest rates,” Alan Cameron, analyst at London-based CSL Stockbroker Ltd., said today in an e-mailed response to questions. There is also an “intensifying search for yield globally, which has driven foreign investors towards emerging and frontier markets including Nigeria,” he said.

Nigeria also sold 26.7 billion naira of 91-day securities at a yield of 11.55 percent, 25 billion naira of 182-day debt at 11.60 percent and 41 billion naira of 364-day bills at an 11.79 percent yield to non-competitive bidders, central bank said.

“Treasury bills rates will continue to moderately drift lower over time as effective monetary conditions become more accommodative,” Samir Gadio, an emerging-markets strategist at Standard Bank Group Ltd. in London, said in e-mailed comments.

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