The Central Bank of Nigeria (CBN) has lowered the stop rate on its 364-day Treasury bill to 17.15 per cent while raising N638.19 billion from the instrument amid strong investor demand.
The 44-basis-point reduction from the previous auction rate of 17.59 per cent came despite overwhelming subscriptions, as investors submitted N3.63 trillion for the one-year security.
The latest auction highlights the CBN’s ability to secure cheaper funding for the government despite strong demand for longer-dated fixed-income instruments.
Across the three maturities offered at Wednesday’s primary market auction, investors submitted total bids of N3.79 trillion against N700 billion offered.
The 364-day bill accounted for 95.9 per cent of total subscriptions, attracting bids equivalent to 7.26 times the N500 billion initially offered.
The CBN ultimately allotted N638.19 billion, N138.19 billion above the amount advertised.
Investors quoted rates between 16 per cent and 19.05 per cent for the one-year instrument, but the apex bank settled at 17.15 per cent, allowing it to reject higher-yield bids amid the strong demand.
At the shorter end of the market, the CBN offered N100 billion each for the 91-day and 182-day instruments.
The 91-day bill attracted N103.32 billion in subscriptions, with the CBN allotting N89.10 billion at an unchanged stop rate of 16.30 per cent.
The 182-day instrument recorded N52.93 billion in subscriptions, below the N100 billion offered, while N35.59 billion was allotted at 16.50 per cent.
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The auction results indicate a pronounced concentration of investor demand around the longer-dated security, giving the CBN greater flexibility in managing the government’s domestic borrowing programme.
Financial sector analyst Jimbe Asalor said the auction demonstrated the CBN’s capacity to borrow at a lower rate when demand is concentrated around a particular maturity.
He noted that the apex bank raised more than its initial offer on the 364-day bill while simultaneously cutting the stop rate by 44 basis points.
Secondary-market yields stood at 17.45 per cent for the 91-day bill, 17.05 per cent for the 182-day instrument and 17.24 per cent for the 364-day bill.
Consultant economist Chukwunonso Iheoma said continued investor preference for longer-dated Treasury bills could support a gradual decline in government borrowing costs and strengthen expectations of eventual interest-rate cuts.
The latest auction comes as the CBN continues to manage liquidity and market conditions through its monetary and fixed-income market operations.
