The interest rates of treasury bills dropped to a 12-month low level of 3.5 per cent at the Primary Market Auction, which took place on Thursday the 2nd of January, 2019. The rates drew closer to zero as investors sustain increased demand of the security. At the auction, the interest rate of the 91-day tenor closed at 3.5 per cent while that of the 182-day and 364-day tenors closed at 4.9 per cent and 5.2 per cent respectively.
The treasury bills market has seen its interest rate drop continually for over a month. The PMA results on Thursday showed that investors oversubscribed to the auction to the tune of N99.84bn (or 133.4 per cent). A total of N74.84bn was offered for subscription while the DMO recorded a total subscription of N174.68bn.
The DMO offered N10bn for subscription on the 91-day day tenor with a range of bids of three per cent to 14 per cent. The range of bids recorded on the 182-day tenor was between 3.84 per cent and 6.5 per cent as N20bn was offered. On the 364-day tenor, the DMO offered N44.84bn, which recorded bid rates between the range of 3.98 per cent and 13.32 per cent.
Some investors said they were awaiting the next Monetary Policy Committee meeting with hopes that a favourable decision from the meeting would push the interest rates higher. Analysts at United Capital Plc said with the concerns around the stability of the Naira, they predicted that the Central Bank of Nigeria would maintain the status quo for now, so long as the unorthodox methodology of selling Open Market Operation bills to foreign portfolio investors as a strategy to preserve the foreign reserves was working.