The Central Bank of Nigeria (CBN) has opened the fourth quarter with a N900bn Treasury Bills auction, with the one-year instrument accounting for more than three-quarters of the offer.
The auction, conducted on behalf of the Debt Management Office (DMO), comprises N100bn in 91-day bills, N100bn in 182-day bills and N700bn in 364-day bills.
Settlement for the auction is scheduled for Thursday, October 8, according to the auction notice.
The latest offer comes amid sustained investor preference for longer-dated Treasury Bills, with demand for the 364-day instrument dominating recent auctions.
At the September 23 auction, investors submitted N4.23tn in bids across the three tenors, with the 364-day bill attracting N4.09tn, representing about 97 per cent of total subscriptions.
The DMO eventually allotted N497.59bn at that auction, while the stop rate on the one-year bill fell by 73 basis points to 15.89 per cent.
The decline has continued across recent auctions, with the 364-day stop rate dropping by 146 basis points in four consecutive auctions from 16.84 per cent on September 2.
The current rate is also 181 basis points below the third-quarter peak of 17.70 per cent recorded on July 8.
The 91-day and 182-day bills were undersubscribed at the September 23 auction, with subscription levels of 0.55 and 0.82 times their respective offer sizes. Their stop rates fell to 15.50 per cent and 15.80 per cent, respectively.
The latest auction is also taking place against a backdrop of substantial liquidity in the banking system.
Investors placed N12.14tn in bids at the final two September Open Market Operations auctions, against N3.4tn offered by the CBN.
Similarly, banks had more than N4.6tn with the CBN's Standing Deposit Facility as of October 2, indicating significant liquidity available for fixed-income investments.
The CBN's latest auction therefore gives investors another avenue to deploy funds, particularly into the N700bn one-year offer.
The auction follows the Monetary Policy Committee's 350-basis-point reduction in the Monetary Policy Rate to 23 per cent, while the one-year Treasury Bill stop rate has continued to ease.
The DMO had allotted about N8.14tn through eight Treasury Bills auctions in the third quarter, exceeding its N5.8tn target by about 40.34 per cent.
The latest auction notice did not disclose the stop rates, bid limits or submission deadline, meaning the eventual pricing will be determined by market demand.
Market attention is expected to centre on the N700bn 364-day offer and whether its 15.89 per cent stop rate falls further as the fourth quarter begins.
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