NTB Stop Rates Fall After CBN Cuts MPR to 23%

Treasury bill stop rates plunged across all three maturities at Wednesday’s primary market auction after the Central Bank of Nigeria cut its Monetary Policy Rate by 350 basis points. The CBN reduced the MPR from 26.50 per cent to 23 per cent a day earlier, triggering a fresh repricing of short-term government securities.

Across-the-board decline

The 91-day Treasury bill recorded the largest decline. Its stop rate dropped to 15.50 per cent from 16.30 per cent, a fall of 80 basis points. The 182-day bill declined by 70 basis points to 15.80 per cent from 16.50 per cent. The 364-day bill dropped 73 basis points to 15.89 per cent from 16.62 per cent.

All three tenors posted lower stop rates, with reductions ranging from 70 to 80 basis points. The auction came a day after the CBN cut the MPR to 23 per cent from 26.50 per cent.

91-day bill leads the fall

The 91-day NTB’s stop rate fell by 80 basis points, the largest reduction among the three tenors. It settled at 15.50 per cent, down from 16.30 per cent. The 182-day bill followed with a 70-basis-point decline to 15.80 per cent from 16.50 per cent. The 364-day bill dropped 73 basis points to 15.89 per cent from 16.62 per cent.

Shift from July and August

The latest rates represent a significant shift from the high-yield environment that characterised the Treasury bill market in July and August. The CBN’s rate cut is already feeding into short-term government securities, and investors who locked into higher T-bill yields in July and August now face lower returns at the latest auction.