By Dipo Olowookere
Things got terrible at the treasury bills space on Wednesday, October 28, 2020, as the Central Bank of Nigeria (CBN) sold the debt instruments at a stop ate lower than one per cent.
It was the first time the apex bank was selling one of the fixed income securities at a rate below one per cent after cutting it down from about 20 per cent over three years ago.
At the previous auction of treasury bills at the primary market, the CBN cleared the 91-day bill at 1.00 per cent, the 182-day bill at 1.00 per cent and the 364-day bill at 2.00 per cent.
But Business Post observed that yesterday, the central bank cleared the three-month instrument at 0.34 per cent, the six-month instrument at 0.50 per cent and the 12-month instrument at 0.98 per cent.
A critical look at the range of the rates investors bid for the treasury bills on Wednesday indicated that some market participants offered to buy the 91-day tenor for as low as 0.18 per cent, the 182-day tenor for as low as 0.40 per cent and the 364-day tenor for as low as 0.29 per cent.
According to details of the exercise yesterday, the CBN offered for sale N49.8 billion worth of the three-month bill, N10.6 billion worth of the six-month bill and 93.9 billion worth of the one-year bill, amounting to a total of N154.3 billion.
However, when the subscriptions were analysed, investors staked N84.9 billion on the 91-day maturity, N41.6 billion on the 182-day maturity and N695.0 billion on the 364-day maturity, totalling N821.5 billion and showed a subscription level of 532.4 per cent.
For the allotment, the central bank allocated N7.5 billion for the short-term bill, N6.0 billion for the mid-term bill and N140.9 billion for the long-term bill.
It is not certain if the CBN will continue its stop rates cutting spree at the next PMA but there are strong indications that the bank will go any length to force moneybags to put their funds in high-risk investments.
Adedapo Adesanya