CBN Cuts One-Year Treasury Bills Rate After Getting Nearly N1trn Bids

By Dipo Olowookere

The stop rate of the one-year treasury bills had a hair cut of 1.26 per cent to 12.24 per cent from the previous 13.50 per cent.

The rate of the debt instrument was trimmed by the Central Bank of Nigeria (CBN) at the primary market auction (PMA) held on Wednesday.

It was the first business day of the week after the two-day holiday observed in the country on Monday and Tuesday for Christmas and Boxing Day, respectively.

Investors were upbeat during the session, as reflected by the subscription rate at the close of the exercise.

The apex bank offered N48.1 billion worth of the 364-day instrument for sale but traders staked N968.2 billion on the tenor with a range of bids between 9.87 per cent and 17.97 per cent.

However, the central bank allotted N268.7 billion at 12.24 per cent.

It was observed that the 182-day treasury bills did not enjoy a strong appetite as the 12-month bill, though it was also oversubscribed by traders.

Analysis of the details of the exercise showed that N17.2 billion worth of the paper was taken to the market by the CBN but investors staked N50.4 billion, with the range of the bids from 6.50 per cent to 13.30 per cent.

However, the central bank allotted N30.7 billion to bidders and cleared the stop rate at 10.00 per cent, lower than the 11.00 per cent of the preceding PMA by 1.00 per cent.

Business Post reports that the apex bank was at the market yesterday with N1.8 billion worth of the 91-day bill but traders offered N18.8 billion for the short-dated instrument, seeking to have the rate between 3.30 per cent and 17.01 per cent.

However, the bank sold it at 7.00 per cent, raising the stop rate by 0.75 per cent and allotting N17.6 billion worth of the note to bidders. In the previous PMA, the three-month debt instrument cleared at 6.25 per cent.

From the analysis, treasury bills valued at N67.1 billion were taken to the primary market yesterday, but N317.0 billion worth of the papers were allotted after receiving bids worth N1.037 trillion from investors, indicating a very strong appetite for the investment tool.