CBN Auctions N1.58 Trillion in Treasury Bills, Sets Interest Rate at 19% for 364-Day Bill.

In its latest Treasury Bills auction, the Central Bank of Nigeria (CBN) successfully sold N1.58 Trillion, underscoring its commitment to managing liquidity in the financial sector. The auction, conducted on February 21st, witnessed substantial investor interest, with the CBN establishing stop rates at a notable 19%. The auction featured three categories based on tenors: 91-day, 182-day, and 364-day bills. Notably, the apex bank offered N11.96 trillion in 91-day bills, boasting a stop rate of 17.00%, appealing primarily to short-term investors. Meanwhile, the 182-day bills garnered N10.21 trillion at a 17.50% stop rate, whereas the 364-day bills boasted the highest rate at 19.00% on an offer of N243.32 trillion.

Investor subscription levels were robust across all tenors, indicative of heightened appetite amid prevailing economic conditions. The 91-day bills witnessed a subscription of N368.03 billion, resulting in an impressive allotment ratio of 27.7x, with N331 billion allotted. Similarly, the 182-day bills recorded a subscription of N98.69 billion, with an allotment ratio of 6.5x, while the 364-day bills saw a substantial subscription of N1.77 trillion, leading to an allotment ratio of 4.9x. Notably, allotments for the 182-day and 364-day bills amounted to N66.2 billion and N1.19 billion, respectively.

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Bids ranged from 11.4400% to 21.0000% for the 91-day bills, 13.0000% to 20.3399% for the 182-day bills, and 15.0000% to 26.0000% for the 364-day bills, showcasing the diverse yield expectations among investors.

This recent Treasury Bills auction echoes the outcomes of the previous auction, wherein an oversubscription occurred, with investors staking N2.3 trillion against an offer of N1 trillion. The one-year bill, with a 19% interest rate, continues to attract significant attention.

Over the past two weeks, the CBN has sold approximately N2.5 trillion, primarily through 364-day auctions, effectively withdrawing over N2.1 trillion from circulation. This move is expected to incur an interest payment of around N398 billion for the apex bank. Such measures align with the CBN’s monetary policy stance aimed at inflation control and currency stabilization. The heightened interest rates on Treasury Bills are poised to impact borrowing costs across various sectors of the economy.

Amidst prevailing global economic uncertainties, the CBN’s strategic actions are pivotal, with their repercussions likely to be discussed extensively in financial circles in the coming weeks.

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