The Central Bank of Nigeria (CBN) has seen a surge in demand for Nigerian Treasury Bills (NTBs) during the auction held on September 11, 2024. Subscriptions reached N563.17 billion, surpassing the N161.88 billion on offer.
This shows strong interest in low-risk assets, with a 248% oversubscription rate. However, compared to the September 4 auction, which had N1.13 trillion in subscriptions, the latest auction saw a 50.14% drop.
The CBN allotted N161.88 billion, a 30.59% decrease from the previous allotment of N233.31 billion.
Breakdown of Bids
Despite the decline in total subscriptions, demand for Treasury Bills, especially for the 364-day tenor, remained solid.
- 91-Day Tenor: CBN offered N6.78 billion but received N17.80 billion in subscriptions, an oversubscription of 162.51%. The bank allotted N10.84 billion, a 37.5% increase from the offer.
- 182-Day Tenor: The N4.92 billion on offer received N6.16 billion in subscriptions, marking a 25.2% oversubscription. The final allotment was N2.52 billion, down by 48.8%.
- 364-Day Tenor: The largest offer, N150.18 billion, saw a massive N539.21 billion in subscriptions, overshooting by 359%. The CBN allotted N148.52 billion, just 1.1% below the offer size.
Interest Rate Trends
Bid rates varied, ranging between 15.00% and 21.00% for the 91-day bills, 15.55% to 19.10% for the 182-day bills, and 17.00% to 24.00% for the 364-day bills. The CBN lowered stop rates across all tenors compared to previous auctions.
- 91-Day Bills: The stop rate decreased to 16.63%, down from 17.00%.
- 182-Day Bills: The stop rate dropped to 17.00%, down from 17.50%.
- 364-Day Bills: The stop rate fell by 0.35% to 18.59%.
This decline reflects the CBN’s strategy to manage the yield curve while addressing investor demand.
Attractive Yields
Treasury Bills continue to attract investors, offering solid returns despite inflation concerns. The true yields for this auction were:
- 17.36% for the 91-day bills
- 18.59% for the 182-day bills
- 22.84% for the 364-day bills
These yields, especially for the 364-day bills, offer appealing returns for investors seeking steady income amidst economic volatility.
