HIGHER stop rates has stirred up oversubscription in the Nigeria Treasury Bill (NTB) Primary Market Auction (PMA) to the tune of N1.974 trillion.
The oversubscription was across the three tenors, with the 364-day bill having the highest at N1.71 trillion. Eventually, the Central Bank of Nigeria (CBN) settled for N1.59 trillion, -29 percent lower than the total subscription
According to dealers, last week’s NTB PMA had a total subscription of N2.24 trillion against N265.50 billion offered across the standard maturities.
Analysts observed the higher stop rates offered at the previous auction stirred the strong subscription in the current auction. However, the stop rates for 91-day and 182-day declined by 24 basis points (bps) and 50bps to 17.00 percent and 17.50 percent, respectively, while 364-day paper stayed unchanged at 19.00 percent.
Earlier, Nigeria’s one-year Treasury Bill was oversubscribed by 300 percent during the PMA by the CBN on Wednesday.
Results from the auction showed that the one-year T-bill was the toast of investors who offered N1.87 trillion for the N600 billion on offer, out of which N908.75 billion was allotted with stop rates of 19 percent. Investors bid between 13 percent and 29.9 percent as interest rates.
The auction was aimed at rolling over maturing Nigerian Treasury Bills worth N1 trillion and it covered maturities across three different tenors: 91-day with N200 billion on offer, 182-day with another N200 billion and 364-day had the highest treasure bill on offer at N600 billion.
At the end of the auction, the 91-day bill received N39.90 billion offers all of which were sold. The 182-day bill got N76.83 billion subscriptions out of which N51.35 billion was allotted.
Analysts noted that with low-risk assets providing more attractive yields, investors will reprice dividend yield upwards, thereby leading to a correction in the short term in the equities market.
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