CBN cuts rates on Treasury Bills, rejects N1.25trn

Central Bank of Nigeria (CBN) reduced interest rates on treasury bills across tenors at the primary market auction on Wednesday. The Apex Bank opened N290 billion worth of treasury bills for investors’ subscription across 91-day, 182-day, and 364-day maturities. Investors responded to the auction strongly, with about N1.6 trillion in total bids staked across the standard tenors at the midweek auction. The market response was influenced by excess liquidity in the financial system, and disinflation played a strong role in spot rates repricing. The CBN results revealed that the auction attracted ₦1.591 trillion in total subscriptions, with approximately ₦345.10 billion allotted. Demand skewed toward duration as one-year treasury bills settled at a 7.40x bid-to-cover ratio. Investors placed N1.479 trillion on Nigerian Treasury bills with 364-day maturity versus N200 billion offered by the authority.
AAG Capital Limited said the lower inflation print for August set the tone for bullish auction ahead of anticipated September policy rate cut by the CBN. In addition, the investment firm explained that the influx of liquidity in the financial system without CBN mopping activity lent credence to strong demand recorded at the auction. The spot rate for Nigerian Treasury bills with 91 days maturity settled lower at 15%, a 32 basis point decline from its previous rate. The CBN priced down the rate on 182-day bills to 15.30%, down by 2 basis points, while the rate on one-year bills closed at 16.78%, down by 91 basis points from 17.69% previously offered.