The Central Bank of Nigeria (CBN) significantly reduced its allotment of Treasury bills at last week’s auction, rejecting N1.636 trillion in bids from investors. Of the N2.41 trillion submitted, the CBN only accepted N774 billion.
This move, coupled with a reduction in interest rates, suggests the CBN is signaling a potential easing of its monetary policy. The high demand for long-term (364-day) Treasury bills, which saw bids exceeding the offered amount by over four times, indicates strong investor interest.
Specifically:
- Offer and Subscription: The CBN offered N700 billion in Treasury bills, divided across 91-day, 182-day, and 364-day maturities. Total investor bids reached N2.41 trillion.
- Allotment: The CBN allotted N774 billion, with the majority (N704.38 billion) going towards the 364-day bills.
- Interest Rate Changes:
- The 91-day bill’s stop rate dropped by 100 basis points to 17.00%.
- The 182-day bill’s rate fell to 18.00% from 18.50%.
- The 364 day bill fell to 18.43% from 20.32%.
Market analysts believe this rejection and rate reduction could be a response to the recent decline in inflation. The high demand for the 364-day bills highlights investor confidence in longer-term investments.
