Market News
NTB stop rates fall on CBN rate cut - PUNCH
Treasury bill stop rates plunged across all three maturities at Wednesday’s primary market auction, with rates falling by 70 to 80 basis points following the Central Bank of Nigeria’s 350-basis-point monetary policy rate cut.
The 91-day Treasury bill recorded the largest decline, as its stop rate dropped to 15.50 per cent from 16.30 per cent.
The 182-day bill followed with a 70-basis-point decline to 15.80 per cent from 16.50 per cent, while the 364-day bill dropped 73 basis points to 15.89 per cent from 16.62 per cent.
The auction came a day after the CBN cut its Monetary Policy Rate from 26.50 per cent to 23 per cent, triggering a fresh repricing of short-term government securities.
The latest rates represent a significant shift from the high-yield environment that characterised the Treasury bill market in July and August.
The 91-day NTB’s stop rate fell by 80 basis points, the largest reduction among the three tenors.
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The bill cleared at 15.50 per cent, compared with 16.30 per cent at the previous auction.
The DMO offered N100bn but received N54.93bn in subscriptions and allotted N11.03bn.
The bill’s secondary-market rate stood at 17 per cent, leaving a 150-basis-point gap between the secondary-market rate and the latest auction stop rate.
The 182-day NTB stop rate declined by 70 basis points to 15.80 per cent from 16.50 per cent.
Investors submitted N82.23bn against the N100bn offered, while the DMO allotted N39.49bn.
The secondary-market rate was 15.90 per cent, just 10 basis points above the auction stop rate.
The one-year Treasury bill also recorded a sharp decline, with its stop rate falling 73 basis points to 15.89 per cent.
Demand for the tenor remained particularly strong, with subscriptions reaching N4.09 trillion against an offer of N400bn.
The DMO allotted N447.07bn, exceeding the advertised amount by N47.07bn.
The latest rate extends the downward trend in the 364-day NTB. From a peak stop rate of 17.70 per cent on 8 July, the one-year bill has now fallen 181 basis points to 15.89 per cent.
Its secondary-market rate stood at 15.60 per cent.
The latest auction shows the speed at which the fixed-income market is adjusting to the CBN’s easing cycle.
Across the three tenors, stop rates now range between 15.50 per cent and 15.89 per cent, significantly below the levels seen earlier in the third quarter.
The three bills attracted combined subscriptions of N4.23tn against N600bn offered, with the 364-day tenor accounting for about 97 per cent of total demand.
The sharp fall in stop rates means the government is now borrowing through Treasury bills at materially lower rates than it did earlier in the quarter, while investors are adjusting to a lower-yield environment following the CBN’s rate cut.
