The recently finished primary market auction of Nigerian Treasury notes was done in advance of inflation statistics, and the apex bank set lower spot rates for the bills. The latest spot rate pricing suggests that efforts to lower balance-sheet funding costs are being spearheaded by the monetary authority.
The first step was to reduce spot rates on one-year tenor bills, which included Treasury and open market operation bills, to a level that was made possible by the persistent increase in investor demand.
Fixed income analysts quoted auction results showing that the Central Bank (CBN) offered N44.21 billion across standard maturities at the Nigerian Treasury bills auction on Thursday.
The auction was scheduled to rollover N44.28 billion in maturing Treasury bills as part of a plan to raise more than N1.564 trillion from the instrument in the third quarter of the year. In its note, CardinalStone told investors that the auction was oversubscribed, with bid-to-cover and bid-to-offer settling at 7.38x and 9.22x, respectively.
Nevertheless, the CBN allotted only N55.23 billion, which was 13.5% of the total subscription staked by investors seeking opportunities to boost portfolio returns.
Due to heavy demand for Treasury bills, the average stop rate declined 14 basis points to settle at 18.1%, CardinalStone said. Elsewhere, the money market rates—open repo and overnight lending rate expanded by 61 bps and 53 bps, respectively, to close at 30.64% and 31.16%.
