CBN Hikes Interest Rate on 364-Day Treasury Bill to 17.59%
The Central Bank of Nigeria (CBN) increased the discount rate on 364-day Nigerian Treasury bills (NTB) 17.59% at the midweek auction, amid significant oversubscription.
The Debt Management Office (DMO) conducted a primary market auction on behalf of the monetary authority, offering N700 billion worth of Treasury bills for subscription on Wednesday.
The offer included N100 billion worth of 91- and 182-day Treasury bills and N500 billion for one-year papers, according to an auction circular obtained by MarketForces Africa.
Reflecting robust appetite for the naira asset, total subscription recorded at the auction surpassed N4.414 trillion, chasing N700 billion offered across the standard tenors.
The auction results translate to a bid-to-offer of 6.3x. The DMO ended up allotting about N1.46 trillion across the 91, 182 and 364-day instruments, with stop rates changing only at the long end.
A review of the auction results obtained by MarketForces Africa showed that Nigerian Treasury bills with 91-day tenors worth N148.57 billion were sold to investors at the rate of 16.30%. The amount raised was above the N100 billion offered, with total subscriptions of N162.21 billion.
Nigerian Treasury bills with 182 days to maturity worth N47.48 billion were allotted to investors at the spot rate of 16.50%. The amount allocated to investors was less than N63.97 billion in total subscriptions, which came below the N100 billion offer for sale.
Reflecting sustained demand for long-duration investment options, Nigerian Treasury bills with 364-day maturity worth N1.26 trillion were allotted to investors at the rate of 17.59%, up by 24 basis points from the previous spot rate.
The amount allotted to investors was significantly lower than the more than N4.188 trillion in investor subscriptions for the one-year treasury bills at the midweek auction.
Overall, the allotment was about 33% of the total amount bet on Nigerian Treasury bills at Wednesday’s Central Bank primary market auction. Money Market Rates Mixed on 36% Banking System Liquidity Surge
