The Central Bank of Nigeria (CBN) has significantly cut stop rates on Nigerian Treasury bills across all maturities in its latest primary market auction. This move comes as the apex bank grappled with an unprecedented N1.07 trillion in excess bids, signaling robust investor confidence and a strategic opportunity for the CBN to reduce its borrowing costs.
The CBN offered N162 billion worth of Treasury bills across 91-day, 182-day, and 364-day tenors. The auction was met with overwhelming enthusiasm from investors, with total subscriptions skyrocketing to N1.233 trillion—multiple times the offer size. Demand for long-duration instruments was particularly high.
Details from the midweek auction reveal the extent of investor appetite:
91-Day Bills: The CBN offered N22.02 billion but received subscriptions totaling N72.63 billion. Consequently, N37.98 billion was allotted. The stop rate for this tenor dropped by 18 basis points to 17.80%.
182-Day Bills: An offer of N40 billion saw subscriptions reach N63.56 billion. The CBN allotted N40.54 billion, with the stop rate decreasing by 15 basis points to 18.35%.
364-Day Bills: This tenor witnessed the most significant oversubscription. Against an offer of N100 billion, total subscriptions surged to an astonishing N1.097 trillion—more than ten times the offer. The stop rate for these one-year bills was slashed to 18.84% from 19.35%.
The massive oversubscription, totaling N1.23 trillion staked against the N162.02 billion offered, provided the CBN with ample leverage to reduce its balance sheet costs. This strategic cut in rates across all standard tenors underscores the CBN’s commitment to economic reform and prudent financial management. This development coincides with Nigeria’s reported boost in trade surplus to N5.17 trillion as imports taper, further indicating positive shifts in the nation’s economic landscape.
