CBN Cuts Rate on 364-Day Nigerian Treasury Bills, Rejects N2.4trn
The Central Bank of Nigeria (CBN) further chopped the discount rate on Nigerian Treasury bills with a 364-day maturity amidst growing interest in long-duration naira assets.
The Debt Management Office (DMO), on behalf of the monetary authority, led the midweek primary market auction where N700 billion worth of Nigerian Treasury bills were offered for subscription.
The auction attracted significant investor interest, with total subscription printing at N3.618 trillion, according to subscription details from the authority – more than 5 times the total offer.
Analysts reported that 91-day Treasury bills with N100 billion on offer were oversubscribed, with total subscription totalling N135.74 billion. The CBN allocated N130.72 billion from the amount bid to investors at the rate of 16.30%, unchanged from the previous auction.
Also, the 182-day offer totalling N100 billion put on the table for investors’ subscription beat its target. Total subscription settled at N104.74 billion in investors’ money.
The CBN allotted N99.18 billion at the rate of 16.50%, the same as the previous.
The Nigerian Treasury bills with 364-day tenors attracted massive subscription totalling N3.378 trillion, and the CBN allotted N1.017 trillion. The spot rate was cut to 17.35% from 17.66%.
Overall, the authority allotted a total of N1.2 trillion across tenors and rejected N2.4 trillion in excess subscriptions. The spot rate repricing for 1-year Nigerian Treasury bills aligned with market expectations.
In a note, investment firm Meristem Securities Limited identified several factors that could influence clearing rates at the Treasury Bills midweek primary market auction.
Fixed income market analysts noted that since the last auction, secondary market yields have trended lower, supported by the moderation in headline inflation to 15.91% year on year in June from 15.93% in May, strengthening the case for lower primary market rates, particularly on the 364- day bill.
However, analysts said the broadly stable stop rates recorded at last week’s FGN bond auction, alongside the recent OMO auction where rates were also held unchanged, suggest the authorities remain comfortable with the current interest rate environment, reinforcing expectations of rate stability.
#CBN Cuts Rate on 364-Day Nigerian Treasury Bills, Rejects N2.4trn CBN Auctioned N600bn in OMO Bills, Raises N3.5trn at 20%
