The Central Bank of Nigeria (CBN) recorded significant success in its latest Treasury bills auction, selling N756 billion worth of bills amid strong investor appetite, particularly for longer-dated instruments.
At the primary auction, the apex bank offered N530bn across three maturities: N50bn for 91-day bills, N80 billion for 182-day bills, and N400bn for 364-day bills. While short- and medium-term bills saw subdued interest with subscription ratios of 0.5x and 0.2x respectively, the 364-day bills garnered overwhelming demand, recording a subscription of 6.2x its offer and bids worth N2.5 trillion.
According to Afrinvest, the CBN allocated N756bn in total, with allotments of 0.5x, 0.2x, and 1.8x across the respective maturities. “The CBN allotted 0.5x, 0.2x, and 1.8x of the respective offers, resulting in total sales of N756bn worth of bills. Notably, the auction cleared at stop rates of 18 per cent and 18.5 per cent for the 91-day and 182-day instruments, respectively unchanged from the prior auction while the 364-day rate declined by 82 basis points to 21.8 per cent.”
The auction achieved an overall subscription of 4.8x the initial offer, outperforming the 3.0x recorded in the prior auction. Analysts attribute the robust performance to investors’ growing preference for higher yields offered by longer-dated Treasury bills.
In the secondary market, unfulfilled demand from the auction spilled over, fueling bullish sentiment and pushing average yields down by 16 basis points to 25.5 per cent week-on-week. Long-tenor bills led the yield contraction, dropping by 25 basis points, while short- and medium-tenor bills saw declines of 12 basis points each.
Afrinvest analysts project a continuation of this bullish trend in the Treasury bills market, citing ample liquidity conditions and anticipated monthly Federation Account Allocation Committee disbursements. They also hinted at the possibility of a shift in monetary policy, which could further enhance investor confidence.
