CBN Rejects N1.6trn from Investors, Cuts Treasury Bills Rates
The Central Bank of Nigeria (CBN) rejected a huge amount of bids from investors who sought to bet on Treasury bills at the main auction last week. Out of N2.41 trillion staked on Nigerian Treasury bills, the CBN only allotted N774 billion at a reduced interest rate and rejected N1.636 trillion subscriptions money.
Some market analysts explained that the monetary authority’s Treasury bills rejection signals a potential decline in benchmark interest as inflation fell sharply. This was due to excess demand for long-dated treasury bills at the primary market auction where N700 billion worth of local papers were offered.
The offer bucket filled with N700.00 billion Nigerian Treasury bills was split into N80.00 billion for the 91-day, N120.00 billion for the 182-day, and N500.00 billion for the 364-day Treasury bills.
Translating to a bid-to-offer ratio of 3.4x, the total subscription level settled lower at N2.41 trillion as against N3.22 trillion recorded at the previous auction. Fixed income investors interest was particularly strong for the 364-day bill, which attracted ₦2.30 trillion in bids; more than four times the offer size, according to TrustBanc Financial Group Limited.
The authority sold N774 billion worth of Treasury bills to participating investors at the auction, exceeding the offer size by 11%. Investment banking firm TrustBanc revealed that demand for 364-day Treasury bills accounted for 91% of total allotments. The auction closed with N774.13 billion in total allotment across standard maturities.
Investors were allotted N34.77 billion for the 91-day, N34.98 billion for the 182-day, and N704.38 billion for the 364-day papers, Cordros Capital Limited said in a note.
Meanwhile, stop rate for 91 day Treasury bills fell by 100 basis points to 17.00%. The DMO offered 18.00% for 182-day Treasury paper, down from 18.50% while spot rate for one year bills fell to 18.43% from 20.32%. #CBN Rejects N1.6trn from Treasury Bills Bids, Cuts Interest Rates SEC to Roll out Guidelines for Fintech in 2025 – Agama
