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Grace Ashiru
The Central Bank of Nigeria (CBN) turned down a significant portion of bids from investors seeking to invest in Treasury bills at last week’s primary auction. Out of the N2.41 trillion submitted for Nigerian Treasury bills, the CBN allotted only N774 billion at a reduced interest rate, rejecting N1.636 trillion in subscription money.
Market analysts suggest that this rejection by the monetary authority signals a potential decline in benchmark interest rates, following a sharp drop in inflation. The auction saw an overwhelming demand for long-term Treasury bills, where N700 billion worth of local securities were initially offered.
The total offer of N700 billion was distributed across three maturities: N80 billion for 91-day bills, N120 billion for 182-day bills, and N500 billion for 364-day bills.
With a bid-to-offer ratio of 3.4x, total subscriptions settled at N2.41 trillion, lower than the N3.22 trillion recorded in the previous auction. Fixed-income investors showed particularly strong interest in the 364-day bill, which attracted N2.30 trillion in bids—over four times its offer size, according to TrustBanc Financial Group Limited.
At the auction, the CBN ultimately sold N774 billion worth of Treasury bills, exceeding the original offer by 11%. TrustBanc further reported that 91% of the total allotments were directed toward the 364-day Treasury bills. The total allotment stood at N774.13 billion across standard maturities.
Investors received N34.77 billion for the 91-day bills, N34.98 billion for the 182-day bills, and N704.38 billion for the 364-day papers, as stated by Cordros Capital Limited.
Meanwhile, the stop rate for the 91-day Treasury bills dropped by 100 basis points to 17.00%. The Debt Management Office (DMO) lowered the 182-day Treasury bill rate to 18.00%, down from 18.50%, while the one-year bill’s spot rate declined to 18.43% from 20.32%.
