CBN Reduces Rates on Treasury Bills, Returns Excess Bids
The Central Bank of Nigeria (CBN) continues to price down Nigerian Treasury bills, albeit with a soft touch across standard tenors at the midweek auction.
At the primary market auction on Wednesday, the Debt Management Office (DMO), on behalf of the CBN, offered N700.0 billion across the 91-day, 182-day, and 364-day papers.
The midweek auction attracted N2.411 trillion in aggregate subscription from deposit money banks, asset managers, pension fund administrators and others.
Reflecting the same pattern seen in past auctions, investors’ appetite for long duration remains elevated. Nigerian Treasury bills with 364 day attracted N2,234.901 billion in subscription. The huge bid was submitted against N550 billion offered by the authority.
Investors also placed N105.334 billion against the N50 billion offer size for 182-day treasury bills at the auction, with a total allotment of N67.677 billion at a lower rate.
Investors showed little interest in the short duration, as 91-day Nigerian Treasury bills attracted N71.233 billion against N100 billion offered for subscription at the auction. The CBN allotted N63.58 billion in T-bills to investors seeking to position at the short end of the curve.
One-year treasury bills totalling N600.493 billion were sold to investors across portfolios and profiles despite N2.234 trillion in subscriptions.
Spot rates for these standard tenors declined. As part of efforts to reduce local borrowing costs, the CBN reduced the spot rate on 91-day bills to 15.949% from 15.95%.
Spot rate for 180 day Nigerian Treasury bills closed at 16.14%, according to auction results from 16.19 previously offered to investors.
One-year Nigerian Treasury bills were priced at the spot rate of 16.15%, down from 16.199% at the previous auction, reflecting successive downward pricing of the long tenor naira asset.
In total, the debt office raised about N732 billion, and rejected excess money to investors from N2.411 trillion received at the auction.
