The Central Bank of Nigeria has raised the stop rate on its 364 day Treasury Bill to 17.59 percent despite receiving N4.4 trillion in bids for securities worth just N700 billion.
At Wednesday’s auction, demand for the one year bill reached N4.19 trillion against the N500 billion offered. The CBN eventually allotted N1.26 trillion, while increasing the stop rate by 24 basis points from 17.35 percent.
The News Chronicle reports that the move marks a reversal from the July 29 auction, when the apex bank reduced the 364 day rate despite strong investor demand.
The 91 day bill attracted N162.21 billion in subscriptions against N100 billion offered, with the stop rate unchanged at 16.30 percent. The 182 day instrument received N63.97 billion against N100 billion offered and remained at 16.50 percent.
The latest auction comes amid substantial liquidity in the banking system following recent government and central bank repayments.
Despite expectations that abundant liquidity and heavy demand would push yields lower, the CBN’s decision suggests it remains comfortable maintaining attractive returns on longer dated government securities.
The development could keep one year Treasury Bill yields above 17 percent and complicate expectations of an imminent easing in Nigeria’s monetary policy.
