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Treasury bill stop rates fell sharply across all three maturities at Wednesday’s primary market auction, declining by between 70 and 80 basis points as the fixed-income market responded to the Central Bank of Nigeria’s 350-basis-point cut in its Monetary Policy Rate.
The 91-day Treasury bill recorded the steepest decline, with its stop rate falling to 15.50 per cent from 16.30 per cent at the previous auction.
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 reduced its Monetary Policy Rate from 26.50 per cent to 23 per cent, prompting a fresh repricing of short-term government securities.
The latest auction marks a significant shift from the higher-yield environment that characterised the Treasury bill market in July and August.
91-day NTB records sharpest decline
The stop rate on the 91-day NTB fell by 80 basis points to 15.50 per cent, compared with 16.30 per cent at the previous auction.
The Debt Management Office offered N100 billion of the bill but received subscriptions worth N54.93 billion and allotted N11.03 billion.
In the secondary market, the bill was trading at 17 per cent, leaving a 150-basis-point difference between the secondary-market rate and the latest auction stop rate.
The movement highlights the immediate repricing taking place across the short end of the fixed-income market following the CBN’s decision to ease monetary policy.
182-day bill stop rate falls to 15.80%
The 182-day NTB also recorded a 70-basis-point decline, with its stop rate falling to 15.80 per cent from 16.50 per cent.
Investors submitted N82.23 billion in subscriptions against the N100 billion offered by the DMO, while the auction allotted N39.49 billion.
The secondary-market rate stood at 15.90 per cent, just 10 basis points above the latest auction stop rate.
The relatively narrow spread indicates that the auction rate for the six-month tenor was closely aligned with prevailing secondary-market pricing.
Strong demand keeps 364-day NTB in focus
The one-year Treasury bill recorded another significant decline, with its stop rate falling 73 basis points to 15.89 per cent from 16.62 per cent.
Demand for the 364-day tenor remained particularly strong. Investors submitted N4.09 trillion in subscriptions against an advertised offer of N400 billion.
The DMO ultimately allotted N447.07 billion, exceeding the original offer by N47.07 billion.
The latest stop rate extends the downward trend in the one-year NTB. From a peak of 17.70 per cent recorded on July 8, the rate has now declined by 181 basis points to 15.89 per cent.
Its secondary-market rate stood at 15.60 per cent.
CBN easing reshapes Treasury bill yields
The latest auction illustrates the pace at which Nigeria’s fixed-income market is adjusting to the CBN’s monetary easing cycle.
Across the three maturities, stop rates now range between 15.50 per cent and 15.89 per cent, significantly below the levels recorded earlier in the third quarter.
Combined subscriptions for the three bills reached N4.23 trillion against N600 billion offered, with the 364-day tenor accounting for approximately 97 per cent of total demand.
The sharp decline in stop rates means the Federal Government is now raising funds through Treasury bills at materially lower yields than earlier in the quarter, while investors are adjusting their expectations to a lower-rate environment following the CBN’s policy decision.
The repricing also underscores the close relationship between monetary policy and government securities, with changes in the benchmark interest rate feeding through to yields across the short-term fixed-income market.
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