By Dipo Olowookere
The stop rate of the 364-day treasury bills depreciated by 0.48 per cent on Wednesday when the Central Bank of Nigeria (CBN) auctioned the debt instrument to investors.
Details of the exercise showed that the apex bank came to the primary market auction (PMA) yesterday with N71.6 billion worth of the one-year bill.
However, it was surprising that market participants showed a significant appetite for the tenor, staking N556.2 billion on it. This may have made the central bank tamper with the stop rate of the tenor.
Business Post reports that the 364-day t-bills rate cleared at the market at the auction at 8.67 per cent compared with the 9.15 per cent it cleared at the previous PMA.
It was observed that the bid rate range for the maturity was between 8.15 per cent and 9.75 per cent. Investors were expecting the CBN to slightly raise the rates as a result of the double-digit inflation rate in Nigeria, which to them would make their investments in the T-bills meaningful and manageable.
However, the central bank was not thinking along with them as the rush for the instrument was an avenue to slightly slice the stop rate. At the close of the exercise, the apex bank allotted N137.3 billion for the 364-day bill.
However, the other two tenors auctioned by the CBN yesterday were not of keen interest to investors, who practically snubbed them.
The CBN auctioned N12.5 billion worth of the 91-day bill and N25.4 billion worth of the 182-day, but they were undersubscribed.
Details of the PMA showed that for the three-month bill, market participants only bid N6.7 billion, while they staked N11.8 billion on the six-month bill.
This forced the apex bank to keep their respectively stop rates intact as the 91-day bill cleared at 2.50 per cent, while the 182-day bill cleared at 3.50 per cent.
It was observed that for the short-term instrument, investors pushed their luck by bidding at 2.50 per cent to 10.00 per cent and for the mid-term instrument, the bid rate range was between 3.49 per cent and 12.00 per cent.
At the close of the exercise, the apex bank allotted N5.2 billion for the 91-day tenor and N7.5 billion for the 182-day maturity.
From the analysis, the CBN took treasury bills worth N109.5 billion to the market but received subscriptions valued at N574.7 billion and sold N150.0 billion.
