CBN Shatters Records with N1 Trillion Treasury Bills Sale

The Central Bank of Nigeria (CBN) has stunned the financial markets with a massive sale of treasury bills worth N1 trillion at an auction on Wednesday, February 23, 2024. This is the largest amount of treasury bills ever sold by the CBN in a single auction, surpassing the previous record of N600 billion in December 2022.

The auction, which took place before the Monetary Policy Committee meeting scheduled for February 26 and 27, offered treasury bills with three different maturities: 91 days, 182 days, and 364 days. The CBN allocated N200 billion for the 91-day and 182-day bills, and a whopping N600 billion for the 364-day bills. The interest rates for these maturities were 5 per cent, 7.15 per cent, and 11.54 per cent, respectively.

The unprecedented sale of treasury bills is seen as a strategy by the CBN to mop up excess liquidity in the system and curb inflation, which has been soaring in recent months. According to the National Bureau of Statistics, Nigeria’s inflation rate reached 28.92 per cent in December 2023, the highest level since 1999. The CBN has been using treasury bills as a monetary policy tool to regulate the money supply and influence the interest rates in the economy.

Treasury bills are short-term debt instruments issued by the CBN on behalf of the federal government. They are considered risk-free and attractive to investors, especially banks and institutional investors. The CBN conducts bi-weekly auctions to sell treasury bills to the public, and the demand and supply of the bills determine the interest rates. The higher the demand, the lower the interest rates, and vice versa.