By Dipo Olowookere
The Central Bank of Nigeria (CBN) on Wednesday left the stop rates of the 91-day and 182-day treasury bills unchanged at the primary market but lowered that of the 364-day instrument.
Details of the exercise showed that T-bills worth N121.6 billion were taken to the market for sale to investors but traders showed a strong appetite for the long-term tenure as had been the case in the previous auctions.
Business Post reports that the value of subscriptions significantly increased as investors offered N493.1 billion to the central bank for the investment asset class, showing a subscription rate of 405.5 per cent.
However, it was observed that much of the bids were for the one-year maturity as it received N480.2 billion. This gave the CBN the opportunity to slice the stop rate by 0.25 per cent and it subsequently allotted N176.1 billion to traders at 7.25 per cent in contrast to the 7.50 per cent it was given at the previous primary market auction, which was just two weeks ago.
But the two other tenors recorded under subscription as investors offered N5.1 billion for the 91-day bill and N7.8 billion for the 182-day bill.
According to the results of the PMA, the apex bank allotted N4.2 billion worth of the three-month instrument to bidders at 2.50 per cent, the same rate of the previous exercise and sold N7.0 billion worth of the six-month instrument at 3.50 per cent, the same stop rate of the last exercise two weeks ago.
A keen look into the details showed that the range of the bid rates for the 364-day bill was between 7.00 per cent and 9.50 per cent as investors were expecting the CBN to raise the rate in line with the current economic realities in the country. However, the central bank was not swayed as it probably felt the hunger for the tenor offered a perfect avenue to cut the rate.
As for the 182-day bill, the range was from 3.45 per cent to 6.75 per cent, while the 91-day bill had from 2.45 per cent to 5.50 per cent
