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Money and Fixed Income

CBN Sells N1.58 Trillion Treasury Bills, Sets 19% Interest Rate



The Central Bank of Nigeria (CBN) has conducted a successful Treasury Bills auction, selling a substantial N1.58 trillion as part of its efforts to manage liquidity in the financial sector.

The auction, held on February 21st, garnered significant interest from investors, resulting in stop rates as high as 19 per cent.

Divided into three categories based on tenors – 91-day, 182-day, and 364-day bills – the auction attracted strong subscription levels, reflecting heightened investor appetite amid prevailing economic conditions.

For the 91-day bills, the CBN offered N11.96 trillion, with a stop rate of 17.00 per cent, enticing short-term investors. Subscription reached N368.03 billion, resulting in an allotment ratio of 27.7x, indicating robust demand.

Similarly, the 182-day bills, with N10.21 trillion on offer at a 17.50 per cent stop rate, saw a subscription of N98.69 billion, leading to an allotment ratio of 6.5x. Meanwhile, the 364-day bills, with the highest rate at 19.00 per cent on a N243.32 trillion offer, received a whopping N1.77 trillion in subscription, translating to an allotment ratio of 4.9x.

Notably, bids ranged from 11.4400 per cent to 21.0000 per cent for the 91-day bills, 13.0000 per cent to 20.3399 per cent for the 182-day bills, and 15.0000% to 26.0000 per cent for the 364-day bills, reflecting diverse investor yield expectations.

This auction echoes the oversubscribed outcome of the previous session, where investors staked N2.3 trillion against N1 trillion on offer. The 364-day bill, offering a 19 per cent interest rate, remains a significant attraction.

With approximately N2.5 trillion sold in the last two weeks, largely through 364-day auctions, the CBN’s efforts aim to tighten liquidity, a crucial component of its monetary policy stance to combat inflation and stabilize the currency.

The uptick in Treasury Bill rates is expected to influence borrowing costs across the economy, with implications likely to fuel discussions within financial circles amidst ongoing global economic uncertainties.

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