CBN Offers 22.1% Yield on One-Year Treasury Bills in Latest Auction

In a bid to manage liquidity and control inflation, the Central Bank of Nigeria (CBN) has announced a significant move in its latest auction of one-year Treasury Bills (T-Bills), selling them at a stop rate of 22.1 percent .

The auction, conducted on July 24, 2024, saw the CBN offering a total of N277.96 billion across various tenors, marking a substantial 21.53 percent increase from the N229.72 billion offered in the previous auction held on June 26, 2024. This increase highlights the central bank’s aggressive approach to attract investors and manage economic conditions.

Investor interest remained robust, with total subscriptions reaching N373.95 billion, significantly exceeding the amount offered. 

However, this represents a notable 51.68 percent decrease from the previous month’s total subscriptions of N774.98 billion. The total sales, or allotments, matched the offered amount of N277.96 billion, reflecting a marginal decline of 2.22 percent from the N284.26 billion allotted in June.

The July 24 auction included three different tenors of Nigerian Treasury Bills (NTBs): 91-day, 182-day, and 364-day.

For the 91-day T-Bills, the CBN offered N16.48 billion, with subscriptions totaling N13.14 billion, which was fully allotted. The bid rates for these bills ranged from 16.0000 percent to 18.5000 percent, with the stop rate set at 18.5000 percent, up from the previous 16.3000 percent, resulting in a true yield of 19.4125 percent .

The 182-day NTBs had an offer amount of N6.44 billion, with subscriptions slightly lower at N6.40 billion, all of which were allotted. Bid rates ranged from 17.0000 percent to 19.5000 percent, with the stop rate rising to 19.5000 percent from 17.4400 percent, indicating a true yield of 21.6194 percent .

The 364-day Treasury Bills, which saw the highest demand, had an offer amount of N255.04 billion with subscriptions reaching N354.40 billion. The allotment for these bills was N258.42 billion. Bid rates ranged from 20.0000 percent to 26.7700 percent, with the stop rate set at 22.1000 percent, up from the previous 21.2400 percent, resulting in a true yield of 28.3697 percent .

The CBN’s decision to offer one-year NTBs at a high stop rate underscores its strategy to attract more investors by providing competitive returns. This approach is aimed at managing excess liquidity in the banking system, which is crucial for controlling inflation.

The strong subscription rates, especially for the 364-day bills, indicate a preference for longer-term securities, likely driven by expectations of future economic stability and favorable returns. 

The competitive bidding across different tenors demonstrates investors’ keen interest in securing these government securities.

This auction reflects the CBN’s ongoing efforts to stabilise the economy by effectively managing liquidity and offering attractive investment opportunities.