Rate Drops to 1.10% as Investors ‘Beg’ CBN With N262bn for N128bn

By Dipo Olowookere

Treasury bills worth N128 million were auctioned by the Central Bank of Nigeria (CBN) on Wednesday through the primary market auction (PMA).

However, when the bids were analysed, it was observed that subscribers staked N262 billion on the debt instrument, representing a subscription level of 205 per cent.

This has been the situation with the sale of T-bills in the country for a long time, with more liquidity chasing the investment tool as investors look for where to put their funds.

This situation has led to a significant decline in the rates and yields and as Business Post observed, the apex bank further trimmed the stop rates yesterday.

An analysis of the PMA showed that the CBN offered for sale N4.4 billion worth of 91-day bill, N14.0 billion worth of 182-day bill and N109.7 billion worth of 364-day.

But when the subscriptions came, market participants bid N8.6 billion for the three-month instrument, N22.9 billion for the six-month instrument and N230.9 billion for the 12-month instrument.

Though the apex bank allotted exactly what it auctioned for the respective maturity, it trimmed the stop rates for the three tenors.

The stop rate for the 91-day bill was lowered to 1.10 per cent from 1.14 per cent, the rate for the 182-day bill was dropped to 1.55 per cent from 1.80 per cent, while the rate for the 364-day bill was cut to 3.05 per cent from 3.34 per cent.

The situation on Wednesday has made observers to project that the treasury bills would soon be sold at a stop rate below one per cent.

“With the way things are going, the CBN will sell the treasury bills to investors at an interest rate lower than one per cent,” an economist based in Lagos, Mr Sunday Aderibigbe, told Business Post.

“What is happening at the market at the moment is that the investors are practically begging the central bank to take their money for free, which should not be so. The reason is that there is much liquidity in the space and if this continues, my projection will be a reality in a very short time,” Mr Aderibigbe added.