Investors have sent a strong signal in Nigeria’s fixed-income market, showing a clear preference for longer-term government securities as demand for the 364-day Treasury bill surged to N3.63tn at the latest Central Bank of Nigeria auction. The huge subscription came even as the CBN reduced the stop rate on the one-year bill to 17.15 per cent, down from 17.59 per cent at the previous auction.
At Wednesday’s primary market auction, total bids across the three Treasury bill maturities stood at about N3.79tn, with the 364-day instrument accounting for 95.9 per cent of all subscriptions. The CBN had offered N700bn in total — N100bn each for the 91-day and 182-day bills and N500bn for the 364-day bill — but demand for the one-year security alone was more than seven times the amount initially offered.
The regulator eventually allotted N638.19bn through the 364-day bill, exceeding its initial offer by N138.19bn. Investors quoted yields ranging from 16 per cent to 19.05 per cent, but the CBN settled at 17.15 per cent, indicating that the strong demand gave it room to reject higher-priced bids while borrowing at a lower rate.
The shorter-term instruments attracted significantly less attention. The 91-day bill received N103.32bn in subscriptions against N100bn offered, with N89.10bn allotted at a 16.30 per cent stop rate. The 182-day bill recorded just N52.93bn in bids against N100bn on offer, with the CBN allotting N35.59bn at a 16.50 per cent stop rate. In the secondary market, yields stood at 17.45 per cent, 17.05 per cent and 17.24 per cent for the 91-day, 182-day and 364-day bills respectively.
Financial sector analyst Jimbe Asalor said the heavy concentration of demand around the one-year bill suggests investors are increasingly interested in locking in relatively attractive returns for a longer period rather than repeatedly rolling over shorter-term securities. Lagos-based economist Chukwunonso Iheoma added that if the preference for longer-dated Treasury bills continues, it could support a gradual reduction in government borrowing costs and strengthen expectations of eventual interest-rate cuts.
source: punch
