CBN Massively Cuts Stop Rates of Treasury Bills at PMA

By Dipo Olowookere

There was a massive reduction in the stop rates of fresh treasury bills auctioned on Wednesday at the primary market auction (PMA) by the Central Bank of Nigeria (CBN), Business Post is reporting.

The stop rates were averagely cut during the exercise by 0.87 percent, with the 182-day instrument suffering the highest slash of 0.95 percent.

It was observed that the apex bank reduced the rate on the 91-day bill by 0.76 percent, while the 364-day instrument was slashed by 0.77 percent at the PMA.

The CBN had offered treasury bills worth N107.1 billion for sale, but received subscriptions valued at N473.6 billion from investors.

At the exercise, N5.85 billion worth of the 91-day treasury bill, N26.60 billion worth of the 182-day debt instrument and N74.60 billion worth of the 364-day bill were offered to investors for subscription.

However, an analysis of the auction result showed that subscribers staked N29.15 billion on the 91-day instrument, N69.63 billion on the 182-day tenor and N374.77 billion on the 364-day maturity.

At the end of the exercise, the central bank allotted the amount it had offered to sell at the market for the respective bills, with the 91-day tenor clearing at 9.74 percent against 10.50 percent of the previous session, 182-day maturity clearing at 10.75 percent against 11.70 percent of the previous exercise and the 364-day bill clearing at 11.14 percent against 11.91 percent of the previous auction.

Meanwhile, rates in the money market was marginally higher by about one percent yesterday as system liquidity fell by N100 billion to N250 billion.

This caused the Open Buy Back (OBB) rate to rise to 3.86 percent from 2.50 percent and the Overnight (OVN) rate increasing to 4.50 percent from 3.07 percent.

According to Zedcrest Research, “We expect rates to remain relatively stable (on Thursday), barring a renewed OMO sale by the CBN.”