CBN Sells Treasury Bills to Local Investors at 1.93%

By Dipo Olowookere

In line with expectations, the Central Bank of Nigeria (CBN) on Wednesday, April 15, 2020, lowered the stop rates of treasury bills.

The apex bank sold some treasury bills to local investors yesterday and it was projected that the debt instruments would be offered at lower rates.

This prediction was based on the rising demand for the investment tool and the present global health crisis has forced some investors to tie their funds to any venture that can fetch them something, no matter how small it is.

This reflected in the level of subscription yesterday as a total of N135.1 billion was staked on the N58.5 billion worth of the T-bills auctioned by the central bank on behalf of the Debt Management Office (DMO), which brought the bills to the market for the federal government of Nigeria.

From the above, it was clear that more investors were willing to buy the debt instrument, causing it to be oversubscribed by 230.9 percent.

At the primary market auction yesterday, the CBN offered the N58.5 billion treasury bills across three maturities.

The apex bank auctioned N5.9 billion worth of 91-day bill, N3.5 billion worth of 182-day bill and N49.1 billion worth of 364-day bill.

But by the time the bids were analysed, subscribers staked N13.1 billion on the 91-day tenor, N12.6 billion on the 182-day maturity and N109.4 billion on the 364-day tenor.

However, for the allotment, the central sold N5.9 billion worth of the three-month bill, N3.5 billion worth of the six-month bill and N49.1 billion worth of the 12-month bill.

For the stop rates, the bank trimmed the rates of the three maturities. Rates of the 91-day bill was sliced to 1.93 percent from 2.30 percent, the 182-day bill was cut to 2.74 percent from 3.40 percent, while the 364-day bill was lowered to 4.00 percent from 4.60 percent.

Meanwhile, the average money market rates depreciated yesterday by 0.38 percent to 2.21 percent following the 0.33 percent lost by the Open Buy Back (OBB) rate and the 0.42 percent decline suffered by the Overnight (OVN) rate.

The decline was despite an increase in the system liquidity as a result of some refunds that hit the local banks on Wednesday.

Business Post reports that at the close of transactions yesterday, the OBB rate fell to 2.00 percent from 2.33 percent, while the OVN dropped to 2.42 percent from 2.83 percent.