Investors Stake N906.21bn on N224.50bn Treasury Bills as Rates Rise

By Dipo Olowookere

The Central Bank of Nigeria (CBN) increased the stop rates of two of the three tenors of the treasury bills sold to investors on Wednesday as it looks to encourage high demand for government debt securities at a period the government has found it challenging to convince offshore investors to purchase its Eurobond.

On Wednesday, the central bank was at the primary market to auction some T-bills, and at the close of the exercise, the stop rates of the 364-day and 182-day bills were moved higher, while the stop rate of the 91-day bill was shortened.

Business Post reports that the bank offered treasury bills worth N224.50 billion for sale at the PMA, but investors staked N906.21 billion on the asset class because of a growing appetite for risk-free investment tools.

A breakdown of the exercise showed that N1.03 billion worth of the three-month T-bills was taken to the market by the CBN, but investors submitted bids worth N4.35 billion during the exercise.

At the close of the auction, the central bank allotted N1.03 billion to traders, with the stop rate lowered by 1.56 per cent to 1.44 per cent from 3.00 per cent.

A look at the six-month bill showed that the bank auctioned N10.55 billion at midweek but received subscriptions valued at N11.31 billion from investors and allotted N10.55 billion at 6.00 per cent, 2.76 per cent higher than the 3.24 per cent of the preceding session.

As for the 12-month bill, N212.92 billion was offered for sale during the session, but the CBN had bids valued at N890.55 billion, who were hungry for higher earnings from the debt instrument.

This significant increase in the subscription rate forced the apex bank to sell more than it initially wanted to allot.

Data showed that the central bank sold N312.92 billion worth of the treasury bills maturity at a higher stop rate, 10.00 per cent, higher than the 9.90 per cent of the previous session by 0.10 per cent.