Rate drops as investors demand N262bn for N128bn T-bills

Treasury bills worth N128m were auctioned by the Central Bank of Nigeria on Wednesday through the primary market auction.

However, when the bids were analysed, it was observed that subscribers staked N262bn on the debt instrument, representing a subscription level of 205 per cent.

According to a Lagos-based economist, Sunday Aderibigbe, this has been the situation with the sale of T-bills in the country for a long time, with more liquidity chasing the investment tool as investors look for where to put their funds, leading to a significant decline in the rates and yields.

An analysis of the PMA showed that CBN offered for sale N4.4bn worth of 91-day bill, N14.0bn worth of 182-day bill and N109.7bn worth of 364-day bill.

But when the subscriptions came, market participants bid N8.6bn for the three-month instrument, N22.9bn for the six-month instrument and N230.9bn for the 12-month instrument.

Though the apex bank allotted exactly what it auctioned for the respective maturity, it trimmed the stop rates for the three tenors.

The stop rate for the 91-day bill was lowered to 1.10 per cent from 1.14 per cent, the rate for the 182-day bill was dropped to 1.55 per cent from 1.80 per cent, while the rate for the 364-day bill was cut to 3.05 per cent from 3.34 per cent.

The situation on Wednesday has made observers project that the treasury bills would soon be sold at a stop rate below one per cent.

“With the way things are going, the CBN will sell the treasury bills to investors at an interest rate lower than one per cent,” Aderibigbe noted.

Explaining further, he stated, “What is happening at the market at the moment is that the investors are practically begging the central bank to take their money for free, which should not be so. The reason is that there is much liquidity in the space and if this continues, my projection will be a reality in a very short time.”

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