By Dipo Olowookere
Despite investors showing more interest in treasury bills at the first primary market auction (PMA) in 2021, the Central Bank of Nigeria (CBN) increased the stop rates of the debt instrument on Wednesday.
Business Post reports that the T-bills rates started to decline a few years ago after the investors did not hide their huge appetite for the investment tool.
About three to four years ago, treasury bills were sold at double-digit rates and this made many investors show interest in it, including banks and other institutional investors.
In fact, some smart investors had to start approaching banks to obtain loans, including intervention loans at a low-interest rate, to invest in T-bills. This made the CBN to restrategize and it began to gradually slice the rates and then blocked the use of loans for treasury bills investment.
However, the oversubscription for the instrument continued and yesterday was no different.
The apex bank went to the market with N232.4 billion worth of treasury bills across the usual three maturities.
According to details of the exercise, N12.8 billion worth of the 91-day bill was offered for sale, N26.6 billion worth of the 182-day bill was auctioned and N193.0 billion worth of the 364-day bill was put up for sale by the central bank yesterday.
Business Post observed that N23.6 billion was staked on the short-term instrument, N30.6 billion was bid for the mid-term instrument and N231.9 billion was subscribed for the long-term instrument, indicating a respective subscription level of 184.4 per cent, 115.0 per cent and 120.2 per cent.
But the apex bank allotted N15.9 billion for the three-month tenor, N25.4 billion for the six-month tenor and N65.9 billion for the 12-month tenor, amounting to N107.2 billion, which is N125.2 billion lower than the initial amount auctioned.
This may have explained why the central bank slightly hiked the rate during the session.
Stop rate for the 91-day bill was raised to 0.50 per cent from the previous 0.04 per cent, the 182-day tenor rate was lifted to 1.00 per cent from 0.50 per cent, while rate for the 364-day maturity was moved up to 1.50 per cent from 1.21 per cent.
