CBN Cuts Interest Rate on 364-Day Treasury Bills
Reversing the previous trend, the Central Bank of Nigeria (CBN) has cut interest rate on its 364-day Treasury bills sold to investors at midweek primary market auction (PMA) on Wednesday.
With aggregate demand surpassing the total offer, the monetary authority kept discount rates on short and mid-tenor bills. Investors’ appetite remain strong as reflected in higher demand for one year bill at the primary market auction on Wednesday.
At the auction conducted by the Debt Management Office (DMO) on behalf the Central Bank, the authority offered N700 billion worth of Nigerian Treasury bills across standard tenors to market participants – Banks, asset managers and other institutional investors.
These tenors include Nigerian Treasury bill that will mature in 91-day, 182-day, and 364-day. Auction results showed that total subscription settled at N1.43 trillion despite a system liquidity deficit of N354.51 billion.
Investors demand was concentrated on the 364-day paper, which accounted for 95% of total subscriptions, TrustBanc Financial Group Limited said in report. The investment firm revealed that the general bid-to-cover came in at 2.04x, higher than the previous auction’s 1.13x.
The monetary authority allotted N808.73 billion, exceeding the offer size by 16%, with the 364-day paper receiving 92% of the total allotment. Stop rates for the 364-day paper declined by 31 basis points (bps) to 19.63%, while the 91- and 182-day rates held steady at 18.00% and 18.50%.
At the previous auction, stop rates settled at 18.00%, 18.50%, and 19.94% for the 91-day, 182-day, and 364-day papers, up from previous rates of 17.00%, 17.79%, and 18.39%
