CBN Cuts Rates on Treasury Bills, Rejects 77% of Total Bids
The Central Bank of Nigeria (CBN) cut interest rates on Nigerian Treasury bills across the 182- and 364-day tenors at the midweek auction, according to details from the results release.
The Apex Bank, through the Debt Management Office (DMO), conducted a primary market auction on Wednesday, offering N1.05 trillion in local treasury papers for subscription.
Total subscription printed at approximately N3.063 trillion, with demand for 364-day bills accounting for 95% of the bids. The CBN allocated N691.87 billion (about 23% of total offers) to investors across the standard tenors, and about 79% of the amount raised was from one-year treasury bills.
The breakdown showed that while the authority offered to sell N100 billion worth of 91-day bills at the auction, subscription for the short-term came in at N102.188 billion, and the CBN eventually allotted N101.29 billion to investors.
The allotment was made at a rate of 15.90%, maintaining the previous pricing amid disinflation and a widening real return on investment.
Details from the auction showed that while the CBN offered N150 billion worth of 182-day bills for subscription, demand was relatively weak due to sustained low appetite for mid-tenor securities.
Subscription for 182-day Nigerian Treasury bills was reported to be settled at N66.989 billion, but the CBN underwrote the offer by selling N47.94 billion to investors at the rate of 16.62%, three basis points below the previous spot rate of 16.65%.
According to auction results, Total subscription of N2.893 trillion chased N800 billion offer size for Nigerian Treasury bills for 364 days to maturity, reflecting sustained interest at the long end of the curve.
However, the CBN only allotted N542.64 billion, less than 18% of investors’ subscription for one-year treasury bills. The interest rate on one-year bills was also reduced to 16.63% from 16.72%, reflecting the expectation that the authority will reduce its funding costs. Treasury Bills Yield Falls as Investors Refill Lost Auction Bids
