CBN Cuts T-Bills Rates, Offers 364-Day Bill at 12.94%

By Dipo Olowookere

The Central Bank of Nigeria (CBN) on Wednesday lowered stop rates of the treasury bills it offered for sale to investors at the primary market auction. This was predicted ahead of the exercise, which was oversubscribed to.

The apex bank had brought to the market the debt instruments worth N122 billion, but during the auction, it received subscriptions valued at N634.12 billion.

As usual, the T-bills were offered in three maturities; the 91-day, 182-day and 364-day, but traders were more interested in the one-year debt instrument like in the past sales.

The bank, at the exercise, auctioned N5.85 billion worth of the 91-day bills, N3.50 billion worth of the 182-day bills and N112.54 billion worth of the 364-day bills.

However, it received from market players offers worth N9.39 billion for the 91-day instrument, N38.09 billion for the 182-day tenor and N586.64 billion for the 364-day maturity.

At the close of the bidding, the central bank allotted N5.85 billion worth of the 91-day bills, N3.50 billion worth of the 182-day bills and N112.54 billion worth of the 364-day bills, with the stop rates clearing at 10.80 percent, 11.00 percent and 12.94 percent respectively.

When compared with the previous exercise held on October 2, 2019, stop rates for the 91-day bill was reduced by 0.28 percent (11.08 percent in the previous PMA), the 182-day bill by 0.60 percent (11.60 percent) and the 364-day bill by 0.26 percent (13.20 percent).

As demand for the treasury bills continues and foreign portfolio investors back in the system, the apex bank is expected to gradually trim the rates until another need for hike in the rates to attract ‘fleeing investors’.

At the secondary market, activities were in cautious mode as a result of concentration on the primary market. At the close of transactions, the average yields went down by 0.12 percent to settle at 12.30 percent.

Business Post reports that yields went down across the four tenors tracked during the session.

Yield on the one-month instrument declined by 0.07 percent to close at 11.06 percent against 11.13 percent of the previous session. Yield on the three-month bill fell by 0.19 percent to 11.66 percent from 11.85 percent, the one on the six-month maturity depreciated by 0.22 percent to 12.12 percent from 12.34 percent, while the 12-month tenor dropped 0.01 percent to 14.34 percent from 14.35 percent.