Due to robust demand for the naira assets, the Central Bank of Nigeria (CBN) rejected a huge part of excess subscriptions submitted by investors at the primary market auction and still went further to cut discount rates.
At the main auction conducted on Wednesday, the Apex Bank offered N400 billion, but investors’ appetite was stronger, and this resulted in total subscriptions of N1.54 trillion – reflecting increased demand for the naira assets. The authority raised above its standard offers, though more than 53% of aggregate subscriptions submitted by investors was rejected. The Apex Bank ultimately sold N714.38 billion, with stop rates declining across tenors amidst efforts to reduce debt service costs and the CBN balance costs.
The auction that cut across standard tenors of 91-day bills, 182-day bills, and 364-day bills saw rates declining as some investors lost out in the competitive bids. The spot rate on Nigerian Treasury bills with 91-day maturities fell 50 basis points to close at 18.00% at the main auction on Wednesday, the result revealed. Fixed income market analysts noted that the spot rate on Nigerian Treasury bills with 182-day maturities reduced by 100 bps to 18.50%. According to the auction result, the spot rate on Nigerian Treasury bills with 364-day maturity was priced down by 3 bps to 19.60%. The unmet bid worth N826 billion filtered into the secondary market, lifting up demand. As a result, asset prices climbed while yields declined.
CBN rejects 53% of Nigerian Treasury Bills auction bids
