The CBN conducted another auction of Treasury bills (NT-bills) on April 12, 2024, with the yield on the 364-day bills dropping to 20.7%, from the previous 21.124%. The auction saw the CBN successfully sell 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, offering N2.78 billion of the 91-day bills, N3.02 billion of the 182-day bills, and N143.84 billion of the 364-day bills.
More than 1000% Oversubscription
The CBN recorded an oversubscription of 1119%, as the total subscription received during the auction was about N1.824 trillion against the N149.64 billion offered.
Details of the Auction
- 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 the stop rate being at 16.24%, the same stop rate of the March 27 auction.
- The 182-day bills recorded an oversubscription of 802.3%, with subscription hitting N27.27 billion. The bids ranged between 16.00% and 21.00%, but the stop rate was put at 17.00%, the same from the March 27 auction. CBN sold N22.67 billion of the 182-day bills.
- The 364-day bills recorded an 1130% oversubscription, with subscription hitting N1.77 trillion, with bids ranging between 19.00% and 25.00%. However, with the stop rate set at 20.7%, the successful bids were N902.03 billion.
What you should know
- Another successful NT-bill auction by the CBN reflects investors’ confidence in Nigeria’s NT-bills, despite the decreased yield rates deviating from the raised monetary policy rate.
- Adetola Freeman, the Regional Analyst, FBS Africa noted,
- “What I think is that investors are averse to other forms of investment. Most people would want to invest in foreign currencies or foreign markets but given that exchange rates have been dropping aggressively for a couple of weeks, I believe that a lot more investors have taken to NT-bills without considering what the yields are looking like.”
- “For investors with a high-risk profile, 21% returns sounds very good.”
- Recall that during the last MPC meeting on March 25 and 26, the CBN further hiked the benchmark interest rate to 24.75%, as February 2024 inflation data put Nigeria’s inflation at 31.9%.
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