Yield on Nigeria T-bills rises on inflation

LAGOS (Reuters) - Nigeria's short-term treasury bill yields rose more than 100 basis points, an auction result showed on Friday, after the central bank increased yield to attract more demand and counter the effect of rising inflation in Africa's most populous nation.

Africa's second biggest economy auctioned 117.3 billion naira worth of treasury bills on higher yields on Thursday with maturities ranging from three months to one year.

The central bank sold 91- and 180- day bills at a yield of around 1.2 percentage points each higher than its last auction two weeks ago. It sold 20.3 billion naira in 91-day paper at 10.45 percent and 33.3 billion naira in 182-day bill at 10.65 percent.

It sold 63.7 billion naira worth of 364-day notes, the longest tenored bills, at 10.76 percent, which accounted for more than two-third of demand at the auction, compared with 9.98 percent at its last auction on March 7.

Demand for the notes grew to 273.5 billion naira as against 266.1 billion naira at its auction two weeks ago.

Treasury bill and bond yields have been falling in recent months, yielding negative returns as they fall close to inflation, making them unattractive to foreign investors.

Consumer inflation in Nigeria rose to 9.5 percent last month, up from 9 percent in January but still ranges within central bank's single-digit target.

Nigeria, top Africa's energy producer, issues treasury bills regularly to reduce money supply, curb inflation and help lenders manage their liquidity.

Source: http://news.yahoo.com/yield-nigeria-t-bills-rises-inflation-152802147--finance.html

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