By Dipo Olowookere
The Central Bank of Nigeria (CBN) on Wednesday surprised investors at the primary market for treasury bills when it increased the stop rates of two of the three tenors it offered for sale.
In recent time, the rate of the debt instrument as well as other fixed-income assets have been cut by the apex bank to discourage investment in the financial asset, especially by moneybags and commercial banks.
According to the CBN, the action was to propel the supply of capital to the real sectors of the economy, especially the manufacturing, where jobs can be created and economic activities can be enhanced.
But at the auction yesterday, the central bank raised the stop rates of the six-month and 12-month bills but further cut that of the three-month bill.
According to details of the exercise, N4.4 billion worth of the short-term bill was taken to the market, while N7.8 billion worth of the mid-term bill was offered for sale, with N38.7 billion worth of the long-term bill auctioned at the exercise.
As usual with the previous sales, subscriptions for the instruments were huge, with N48.1 billion bid received for the 91-day bill, N12.1 billion worth of bids were received for the 182-day bill, while N42.7 billion worth of subscriptions were received for the 364-day bill.
But the central bank allotted N4.4 billion for the three-month maturity at 0.10 per cent as against the previous rate of 0.02 per cent. The bank also sold N7.8 billion worth of the six-month bill at 0.60 per cent compared with 0.09 per cent of the last exercise, while N38.7 billion was allotted for subscribers of the one-year maturity at a stop rate of 3.20 per cent versus 0.15 per cent it was sold at the preceding auction.
The main reason the CBN increased the stop rates for the mid and long-term bills is not known but it could be to attract investors to the market, especially now that Nigeria is in recession.
