By Dipo Olowookere
Investors of the Nigerian treasury bills got a better bargain on Wednesday as the instrument cleared at a stop rate higher than the previous exercise.
The Central Bank of Nigeria (CBN) auctioned the debt instrument worth N141.4 billion, it received subscriptions valued at N239.3 billion and allotted N179.3 billion at the end of the sales.
The T-bills were sold in three maturities of three months, six months and 12 months.
The bank auctioned N12.3 billion worth of the 91-day bills but got bids valued at N2.4 billion, with a range of bid rates between 5.00 per cent and 9.00 per cent.
However, the tenor was cleared at 6.49 per cent compared with the previous exercise’s rate of 5.50 per cent, indicating an uptick of 0.99 per cent. The central bank allotted N2.2 billion worth of the instrument to subscribers at the close of the trades.
As for the 182-day bills, the CBN brought about N20.4 billion to the market, but traders were only interested in about N3.6 billion, ostensibly because the rate was not attractive enough.
Cognisant of this, the central bank baited them with a 1.50 per cent rate hike and allotted N3.3 billion at 7.50 per cent. In the previous primary market auction, this same bill cleared at 6.00 per cent.
A look at the 364-day instrument showed that investors’ appetite grew yesterday as traders outbid the N108.7 billion the apex bank offered for sale.
Business Post reports that investors staked N233.3 billion on the maturity, but the bank only sold N173.8 billion at 12.00 per cent, 2.25 per cent higher than the 9.75 per cent it cleared in the preceding exercise.
Many observers expected the increase in the T-bills’ stop rates on Wednesday because a day earlier, the CBN’s Monetary Policy Committee (MPC) raised the MPR by 1.50 per cent to 15.50 per cent to 14.00 per cent. This action was taken to deflate inflation, which rose by 20.52 per cent last month.
The banking industry watchdog explained that the increase in the benchmark interest rate would bring down inflation in the coming months as the high cost of borrowing would reduce liquidity in the system and moderate the prices of goods and services.
