The Central Bank of Nigeria (CBN) has taken a measured step to lower spot interest rates on Nigerian Treasury Bills (NTBs) with 91-day and 364-day maturities, following a highly competitive Primary Market Auction (PMA) held on Wednesday. Despite overwhelming investor demand, the apex bank rejected all excess bids beyond the offered amount.
At the auction, which was coordinated through the Debt Management Office (DMO) on behalf of the CBN, investors demonstrated a heightened appetite for naira-denominated instruments. The event recorded a total subscription of N1.31 trillion, almost triple the advertised offer of N450 billion.
Particularly, the 364-day treasury bills witnessed a flood of investor interest. While the CBN made N300 billion worth of one-year bills available, subscriptions surged to N1.208 trillion, out of which N369.97 billion was eventually allotted. This reflects sustained investor confidence in longer-term Nigerian debt assets.
As a result of the intense demand, the spot rate for the 364-day bills was reduced from 19.56% to 19.35%, allowing monetary authorities to ease the discount rate slightly while still satisfying core market participants.
Meanwhile, the 182-day bills failed to draw similar enthusiasm. Against an offer of N100 billion, subscriptions amounted to only N30.03 billion, which was fully allotted. The interest rate for this mid-term tenor remained unchanged at 18.50%.
Short-term 91-day treasury bills, on the other hand, saw oversubscription. Against a target of N50 billion, investor demand reached N70.92 billion. Consequently, the CBN matched its initial offer size while adjusting the spot rate slightly downward from 18% to 17.98%.
This auction result underscores a strategic policy move by the CBN aimed at managing liquidity while maintaining investor confidence. The full rejection of excess bids is seen as a measure to prevent overheating in the fixed-income space and ensure that rates remain within the desired monetary policy corridor.
Analysts say the strong demand, particularly for longer-tenor bills, is indicative of renewed interest in Nigerian sovereign instruments amid signs of improving macroeconomic stability. They also note that the central bank’s move to cut interest rates may signal a gradual policy easing phase, aimed at fostering economic growth while controlling inflation.
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