The Central Bank of Nigeria (CBN) conducted another Treasury bills (NT-bills) auction on April 12, 2024, with the yield on the 364-day bills decreasing to 20.7% from the previous 21.124%. The auction witnessed the successful sale of N951.83 billion worth of bills, representing a 42% decline from the N1.64 trillion sold during the March 27 auction.
The CBN offered N149.64 billion of NT-bills during the auction, including N2.78 billion for the 91-day bills, N3.02 billion for the 182-day bills, and N143.84 billion for the 364-day bills.
Over 1,000% Oversubscription in the Auction The CBN recorded a massive oversubscription of 1,119%, as the total subscription received during the auction reached approximately N1.824 trillion, against the N149.64 billion offered.
Auction Details For the 91-day bills, the total subscription received was N27.34 billion, representing an 883.45% oversubscription from the N2.78 billion offered. The rates of the subscriptions ranged between 15.00% and 17.50%. The CBN sold N27.11 billion with a stop rate at 16.24%, the same as the March 27 auction.
The 182-day bills recorded an oversubscription of 802.3%, with subscription reaching N27.27 billion. The bids ranged between 16.00% and 21.00%, but the stop rate remained at 17.00%, the same as the previous auction. CBN sold N22.67 billion of the 182-day bills.
The 364-day bills experienced an 1,130% oversubscription, with subscription reaching N1.77 trillion. Bids ranged between 19.00% and 25.00%, but with the stop rate set at 20.7%, successful bids amounted to N902.03 billion.
Implications of the Auction The successful NT-bills auction by the CBN demonstrates investors’ confidence in Nigeria’s NT-bills, despite the yield rates deviating from the raised monetary policy rate. Adetola Freeman, Regional Analyst at FBS Africa, explained that investors are avoiding other forms of investment due to the unfavorable conditions. As a result, they are turning to NT-bills without considering the lower yields.
During the last MPC meeting on March 25 and 26, the CBN increased the benchmark interest rate to 24.75%, with February 2024 inflation data placing Nigeria’s inflation at 31.9%.
