Robust investors appetite for the one-year bills on Wednesday exerted downward pressure on one-year bills yield, contracting to 28.02 percent from 28.36 percent recorded in the previous auction.
The stop rate at this auction also fell to 21.89 percent from 22.1 percent at the previous auction.
The CBN sold only N162.72 billion worth of the one year T-bill, higher than the amount offered as it was oversubscribed by 300 percent to the tune of N431.58 billion.
Segun Adams, research analyst Afrinvest West Africa Limited said that the stop rate saw a modest decline on the long end, underscoring a shift in bargaining power in favour of the DMO, which, through the CBN, issues these bills.
“This shift is supported by the DMO achieving the 2024 domestic borrowing target in the first half of the year alone. Simultaneously, market participants are adjusting their expectation in anticipation of a potential near-term peak in inflation and interest rate,” he said.
Last month, the MPC increased the Monetary Policy Rate (MPR) by 50 basis points to 26.75 percent from 26.25 percent.
This was met with an increase in the yield and stop rates of NT-bills at the auction just after the hike to 28.36 percent and 22.1 percent respectively.
This Wednesday, the range of bid was 20.50-24.99 compared to 20.00-26.77 at the last auction, the Apex bank rolled over a total of N216.09 billion across the 91- 182- and 364-Day tenors.
“I was expecting stop rates to be around 22 percent, the range of bids was what propelled the CBN to bring that yield that low,” Joshua Joseph, fixed-income analyst at CSL Stockbrokers.
Joseph said there was surplus liquidity in the market that contributed to the range of bids compared to at the last auction liquidity was negative.
“ Also the rates are also determined by where cbn is comfortable with,” he said.
According to the data from the Central Bank of Nigeria, yesterday bank liquidity was N539.4 billion.
On the 91-day and 182-day T-Bills, yields remained the same at 19.41 percent and 21.61 respectively.
The CBN sold N20.74 billion, more than the auctioned amount on the 91-days bill as it was oversubscribed to the tune of N21.82 billion by investors.
While N32.62 billion of the 182-day NT-bills was sold, less than the N51.34 billion offered.
Overall CBN sold a total of N216.08 billion worth of bills, the same amount offered at the Primary Market Auction across the 91-, 182-, and 364-day tenors.(BusinessDay)
