CBN cuts treasury bills rates, rejects 77% of bids

The Central Bank of Nigeria (CBN) has reduced interest rates on Nigerian Treasury bills for the 182-day and 364-day tenors, while rejecting about 77 per cent of total subscriptions at its midweek primary market auction. The auction, conducted in collaboration with the Debt Management Office (DMO), saw the apex bank offer N1.05 trillion worth of […]

The Central Bank of Nigeria (CBN) has reduced interest rates on Nigerian Treasury bills for the 182-day and 364-day tenors, while rejecting about 77 per cent of total subscriptions at its midweek primary market auction.

The auction, conducted in collaboration with the Debt Management Office (DMO), saw the apex bank offer N1.05 trillion worth of Treasury bills.

However, total subscriptions surged to N3.063 trillion, reflecting strong investor demand, particularly for long-term instruments.

Despite the oversubscription, the CBN allotted only N691.87 billion to investors representing about 23 per cent of total bids, with nearly 79 per cent of the amount raised coming from one-year Treasury bills.

 Breakdown of the results showed that the 91-day bills attracted subscriptions of N102.19 billion against an offer of N100 billion. The CBN allotted N101.29 billion at a rate of 15.90 per cent, unchanged from the previous auction, amid easing inflation and improving real returns.

For the 182-day tenor, demand remained subdued. Subscription came in at N66.99 billion compared to an offer of N150 billion. The CBN allotted N47.94 billion at a reduced rate of 16.62 per cent, down from 16.65 per cent recorded at the previous auction.

Investor appetite was strongest at the long end of the curve, with the 364-day bills drawing N2.893 trillion in subscriptions against an offer of N800 billion, accounting for about 95 per cent of total bids.

However, the apex bank allotted only N542.64 billion for the one-year tenor, representing less than 18 per cent of total subscriptions. The stop rate on the instrument was also cut to 16.63 per cent from 16.72 per cent.

The significant rejection rate and lower yields indicate the CBN’s strategy to reduce borrowing costs while managing liquidity in the financial system, even as investors continue to show strong interest in government securities.