Nigeria’s One-Year Treasury Bill Sells for 9% at Primary Market

By Dipo Olowookere

The stop rate for the one-year treasury bill was again raised by one per cent at the primary market auction (PMA) conducted on Wednesday by the Central Bank of Nigeria (CBN).

However, the stop rates of the 3-month and 6-month treasury bills remained unchanged, according to details of the exercise obtained by Business Post.

The rates have remained flat for the past four consecutive sessions despite investors showing a considerable appetite for the instruments just like the long-dated bill.

Yesterday, the apex bank went to the market with T-bills valued at N69.5 billion but returned with N153.4 billion from the N247.4 billion worth of subscriptions received from investors.

According to details of the sales, N15.9 billion worth of the 91-day bill was auctioned to market participants yesterday and N4.5 billion worth of the 182-day bill and N49.1 billion worth of the 364-day bill.

However, the bank received N15.9 billion for the short-dated instrument, N13.9 billion for the mid-dated instrument and N217.6 billion for the long-dated instrument.

When it was time to allot the treasury bills, N12.5 billion was sold for the 91-day bill, N8.8 billion was allotted for the 182-day bill while N132.1 billion was sold for the 364-day bill.

As for the stop rates, the CBN left the 3-month tenor at 2.00 per cent, the 6-month tenor was retained at 3.50 per cent, while the 12-month maturity cleared at 9.00 per cent in contrast to 8.00 per cent of the previous session.

If this tempo is sustained, the stop rate of the 364-day treasury bill will most likely hit the double-digits for the first time in a while at the next exercise.

This will attract more investors, who have yearned for better yields environment in the fixed income market.

However, it will hurt the stock market, which has been struggling to replicate the feats it achieved last year when the chips were down at the risk-free fixed income market.

Last year, the nation’s stock market grew by 50.03 per cent but this year, it has depreciated by 4.06 per cent and this because investors have lost appetite for equities and are paying more attention to other forms of investments like treasury bills, cryptocurrencies, amongst others.