The Debt Management Office has said that neither it nor the Central Bank of Nigeria predetermines the interest rates at which the government sells the Nigerian Treasury Bills at the monthly auction market.
In a statement made available to our correspondent in Abuja on Wednesday, the DMO said different bidders attend the market with different rates, taking a cue from the rates obtainable at the secondary market.
The NTBs are the Federal Government’s short-term debt instruments issued regularly by the DMO through the CBN, which serves as the debt agency’s agent.
The statement read in part, “Investors bid at the NTBs auction at their own interest rates. Thus, the rates on the NTBs are not predetermined or determined by the CBN or the DMO. The rates at which the investors bid are entirely at their discretion but will typically depend on prevailing secondary market rates, their portfolio needs and investment preferences.
“In allotting to bidders oftentimes, the DMO and the CBN will also be guided by similar factors and the implications for markets and macroeconomic stability. “Taking into account all these factors, the interest rates at the auctions will ultimately be determined by demand and supply. The claim that the CBN increased rates to attract investors at the NTB auction is not correct.”
The DMO faulted a report (not in The PUNCH) that attributed higher interest rates to fear of capital flight ahead of the 2019 general elections.
It added, “Having highlighted the many factors considered by investors in the NTB as well as the key considerations of the DMO, and equally important, the fact that foreign investors still participate in the domestic fixed income securities markets, it is wrong to attribute the auction rate to fears about capital flight.
“To buttress this point, interest rates on the NTBs in the first half of 2017 were much higher than the present rates, at a time when there was no election approaching.”