Demand for the 364-day instrument accounts for 95.9% of total subscriptions despite a 44-basis-point cut in the stop rate….
Investors are showing a stronger preference for longer-term government securities, with the latest Treasury Bills auction recording overwhelming demand for the one-year instrument.
At the Central Bank of Nigeria’s primary market auction on Wednesday, investors submitted N3.63tn in bids for the 364-day Treasury Bill, accounting for 95.9 per cent of the N3.79tn total subscriptions across the three maturities.
The strong demand came despite the CBN reducing the stop rate on the one-year bill by 44 basis points to 17.15 per cent, from 17.59 per cent at the previous auction.
The results point to a shift in investor appetite towards longer-dated securities, while demand for shorter-term instruments remained relatively weak.
The CBN offered N700bn across the three maturities, comprising N100bn each for the 91-day and 182-day bills and N500bn for the 364-day instrument.
However, total subscriptions exceeded the amount offered by more than five times, reaching approximately N3.79tn.
The 364-day bill was the clear favourite, attracting bids worth 7.26 times the amount offered.
The apex bank eventually allotted N638.19bn on the instrument, exceeding its initial offer by N138.19bn. Despite the additional allotment, only about 17.6 per cent of total bids received for the one-year bill were accepted.
Investors quoted rates ranging from 16.00 per cent to 19.05 per cent, but the CBN settled at a stop rate of 17.15 per cent, indicating that the strong demand enabled the regulator to reject higher-priced bids.
The CBN also maintained the stop rates for the shorter-tenor bills. The 91-day instrument attracted N103.32bn in subscriptions against the N100bn offered, with N89.10bn eventually allotted at 16.30 per cent.
The 182-day bill recorded weaker demand, receiving N52.93bn in bids against N100bn on offer. The CBN allotted N35.59bn at an unchanged stop rate of 16.50 per cent.
In the 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.
