By Dipo Olowookere
It was a bad day for treasury bills investors in Nigeria on Wednesday as the Central Bank of Nigeria (CBN) slashed the stop rates of the debt instruments, making them go home a bit disappointed.
Unlike the preceding exercise, the apex bank cut the rates across the three maturities it offered for sale through the primary market auction (PMA).
Business Post reports that the central bank capitalised on the significant interest shown by investors in the asset class to reduce the stop rates.
T-bills valued at N129.9 billion were brought to the market yesterday in 91-day, 182-day and 364-day tenors, but bids worth N475.7 billion were received from investors, indicating a subscription level of 366.2 per cent.
A breakdown showed that the CBN, which conducted the sales for the Debt Management Office (DMO) on behalf of the federal government of Nigeria, auctioned N2.7 billion of the three-month bill, N3.5 billion of the six-month bill and N123.1 billion of the 12-month bill.
Details of the subscriptions showed that investors staked N12.7 billion on the short-term instrument, N14.0 billion on the mid-term instrument and N449.0 billion on the long-term instrument.
However, the apex bank allotted a total of N223.7 billion to the subscribers, with the 91-day maturity accounting for N2.7 billion, the 182-day maturity accounting for N3.5 billion and the 364-day maturity accounting for N217.5 billion.
As for the stop rates, the central bank cleared the 91-day bill at 2.48 per cent, lower than the previous 2.50 per cent. The 182-day bill cleared at 3.30 per cent yesterday as against 3.44 per cent at the last PMA, while the 364-day bill cleared at 5.40 per cent compared with 5.50 per cent of the preceding auction.
The development yesterday has sent a signal to investors, especially when the subscription is critically looked into. The next exercise may witness another rate cut, though it would be marginal.
