Dipo Olowookere
By Dipo Olowookere
The Central Bank of Nigeria (CBN) on Wednesday, August 11 tampered with the stop rate of the one-year treasury bills at the primary market auction (PMA).
The apex bank, during the exercise yesterday, sliced the rate of the 364-day paper by 0.85 per cent after investors showed a significant interest in the investment tool.
According to details of the sales analysed by Business Post, the bank approached the market with N27.0 billion worth of the note but the bids received from market participants stood at N387.1 billion.
Investors have continued to show a strong appetite for the 12-month instrument and this has given the central bank the opportunity to play with the rate at the market.
It was observed that for this particular bill, the range of the bid rates was between 6.85 per cent and 10.00 per cent, but the CBN settled for 7.35 per cent, lower than the 8.20 per cent it sold the maturity at the preceding PMA.
At the end of the bidding, the bank allotted N147.8 billion worth of the one-year instrument to investors, higher than the N27.0 billion it intended to sell to them.
However, the apex bank did not touch the stop rates of the 91-day and 182-day bills yesterday as the hunger for these tenors was very low.
The bank had offered to sell N8.4 billion worth of the three-month bill at the auction yesterday but it only received subscriptions valued at N6.2 billion and it subsequently allotted N4.8 billion at 2.5 per cent. The bid range for the paper was between 2.49 per cent and 10.00 per cent.
Also, the central bank auctioned N16.1 billion worth of the six-month bill during the exercise but it received bids worth N5.1 billion, while N3.8 billion was sold at 3.5 per cent.
Curiously, the bid range for this tenor was from 3.48 per cent to 12.00 per cent.
The CBN regularly sells T-bills to investors at the primary market with the proceeds used to finance the budget deficit. The sale of the debt instrument is part of the borrowing plans of the federal government for the domestic market.
