The treasury bill stop rate responded to the Central Bank Monetary Policy Committee (MPC) Monetary Policy Rate (MPR) increase for the first time in months, in contrast to previous auctions in 2023. Despite the 200bps rate hike from January to May 2023, the NTB stop rate declined aggressively, with the 365-day falling below double digits due to robust liquidity driving subscriptions, thereby neutralizing stop rate increases. At the NTB auction held on July 26, 2023, the stop rate spiked to 6.00%, 8.00%, and 12.15% for the 91-day, 182-day, and 364-day from 2.86%, 3.50%, and 5.94% recorded at the previous auction (July 12, 2023). The subscription for the NTB auction came in higher at N398.17bn with a spread of N7.85bn, N6.44bn, and N383.88bn for the 91-day, 182-day and 364-day tenors contrary to N264.33bn offered by DMO. However, the DMO sold the exact amount offered of N264.33bn, but with a slight adjustment in the spread, 91-day and 182-day allotments settled at N2.85bn and N6.44bn higher than N1.74bn and N1.26bn offered while 364-day allotment dipped to N255.04bn from N383.88bn offered. The positive adjustment in rates should spur massive demand in the secondary market today, rescinding investors’ cautious approach (see Table 1 below).
Table 1:
