Elijah Idowu
The Central Bank of Nigeria (CBN) successfully raised N284.26 billion from investors keen on high yields during its latest Nigerian Treasury Bills (NTBs) auction held on Wednesday, June 26, 2024.
The Debt Management Office (DMO) reported that this auction attracted significant interest from investors, with total subscriptions amounting to N773.98 billion. This overwhelming response far surpassed the initial offer of N228.72 billion, highlighting the strong demand for these securities.
Treasury Bills (T-Bills) are short-term debt instruments issued by the CBN to help manage liquidity in the economy. By issuing T-Bills, the CBN can effectively control the money supply, either by absorbing excess liquidity when selling the bills or by injecting liquidity when redeeming them. This mechanism is a key part of the CBN’s monetary policy toolkit, helping to stabilize the economy and control inflation.
Additionally, T-Bills are an essential tool for the government to raise short-term funds necessary for its operations, including bridging budget deficits. They provide a secure investment avenue for investors while ensuring the government can finance its immediate fiscal needs. This dual role of T-Bills underscores their importance in both monetary policy implementation and fiscal management.
In the most recent auction, the offered amount surged by 417.1% compared to the N44.23 billion offered in the previous auction held on June 13, 2024.
Furthermore, total subscriptions increased by 89.8%, rising from N407.76 billion, while total sales soared by 414.7%, up from N55.23 billion.
The latest auction witnessed robust investor demand, with subscription rates exceeding the offered amounts across all tenors, underscoring strong investor interest in the securities.
Auction Data Breakdown
The auction featured three tenors: 91-day, 182-day, and 364-day bills.
- 91-day Bills: Maturing on September 25, 2024, these bills had an offer of N29.83 billion. They received subscriptions worth N36.29 billion, with an allotment of N28.15 billion. Bids ranged from 15.98% to 24.00%, with a stop rate of 16.30%.
- 182-day Bills: Maturing on December 25, 2024, these bills had an offer of N30.67 billion and received subscriptions totaling N40.58 billion. The allotment was N36.44 billion, with bid rates between 17.00% and 21.00%, and a stop rate of 17.44%.
- 364-day Bills: Maturing on June 25, 2025, these bills had the highest offer of N168.21 billion. They saw overwhelming subscriptions of N697.11 billion and an allotment of N219.67 billion. Bids for this tenor ranged from 16.00% to 25.00%, with a stop rate of 20.68%.
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