CBN generates N532.5bn from treasury bills sales

The Central Bank of Nigeria (CBN) conducted three rounds of Nigerian Treasury Bills (NTBs) auctions worth N532.5 billion in September, analysis of the primary market auction sheets showed.

The breakdown showed offer of N203.2 billion on only the 364-day instrument in the first, N152.2 billion, and N177.1 billion across the three tenors in the second and third respectively.

Investors’ appetite registered strong in the month with a bid-to-cover ratio of 4.2 times, albeit weaker than August’s demand of 5.4 times.

Notably, the 182-day instrument recorded the strongest buy interest with bid-to-cover ratio of 4.3 times with sales worth N2.5 billion. Trailing, the bid-to-cover ratio of the 364 and 91-day instruments stood at 4.3 times and 2.9 times times respectively, following sales worth N527.1 billion and N2.8 billion.

During the final auction in September, stop rate on the 91-day and 364-day instruments declined to five per cent and 11.4 per cent from five per cent and 14 per cent respectively, while stop rate on the 182-day instrument rose to 6.6 per cent from 5.9 per cent.

In the secondary T-bills market, average yield rose 51 basis points month/month to 8.3 per cent, owing substantially to sell pressure on the 364-day bill (yield: +135bps), as well as the 182-day (yield: +58bps) and 92-day (+40bps) instruments.

In October, analysts expect system liquidity to remain buoyant, while investors cherry-pick instruments in the secondary market amidst cautious trading.

This month, in the primary market, the Debt Management Office (DMO) reopened the issuance of FGN Apr 2029, Jun 2033, Jun 2038, and Jun 2053 bond instruments. The total offering amounted to N360.0 billion, with N90 billion allocated to each of the specified tenors.

However, the bid-to-cover ratio was lackluster, standing at 0.8 times, as demand remained subdued for all tenors except the 2053 instrument, which saw a bid-to-cover ratio of 2.3 times.

As a result, the stop rates for these tenors improved compared to the previous auction in August, with rates now at 14.5 per cent, 15.45 per cent, 15.55 per cent, and 16.25 per cent, respectively, as opposed to the rates of 13.8 per cent, 15 per cent, 15.2 per cent, and 15.85 per cent recorded in the previous auction.

In the secondary market, average yield rose 96bps m/m to 13.8 per cent as yield across all terms rose 146bps, 122bps, and 58bps m/m respectively.