The Central Bank of Nigeria (CBN) has sold one-year Treasury Bills (T-Bills) at a stop rate of 22.1% during its auction on July 24, 2024. This move aligns with the central bank’s ongoing efforts to manage liquidity and control inflation within the economy.
Auction Details:
- Total Offered: N277.96 billion across various tenors.
- Total Subscription: N373.95 billion, indicating strong investor demand but a decrease of 51.68% from the previous month’s total subscriptions of N774.98 billion.
- Total Allotment: N277.96 billion, a slight decline of 2.22% from N284.26 billion allotted in the previous auction.
Breakdown by Tenor:
- 91-Day T-Bills:
- Offered Amount: N16.48 billion
- Subscription: N13.14 billion (fully allotted)
- Bid Rates: 16.00% to 18.50%
- Stop Rate: 18.50%, up from 16.30%
- True Yield: 19.41%
- 182-Day T-Bills:
- Offered Amount: N6.44 billion
- Subscription: N6.40 billion (fully allotted)
- Bid Rates: 17.00% to 19.50%
- Stop Rate: 19.50%, up from 17.44%
- True Yield: 21.62%
- 364-Day T-Bills:
- Offered Amount: N255.04 billion
- Subscription: N354.40 billion (oversubscribed)
- Allotment: N258.42 billion
- Bid Rates: 20.00% to 26.77%
- Stop Rate: 22.10%, up from 21.24%
- True Yield: 28.37%
What You Should Know:
The high stop rate for the one-year NTBs reflects the CBN’s strategy to attract investors by offering competitive returns. This approach helps the central bank manage excess liquidity in the banking system, a key factor in controlling inflation. The high subscription rate, especially for the 364-day bills, suggests a strong preference for longer-term securities, likely due to expectations of future economic stability and attractive returns.
