Nigeria’s 364-Day Treasury Bills Oversubscribed by 1,746.7%, Subscriptions Hit N2.48 Trillion

Nigeria’s 364-Day Treasury Bills Oversubscribed by 1,746.7%, Subscriptions Hit N2.48 Trillion

James Emejo in Abuja and Kayode Tokede in Lagos

The 364-day Nigerian Treasury Bills (NTBs) issued by the Central Bank of Nigeria (CBN) yesterday recorded oversubscription of 1,746.7 per cent, as subscription by investors hit N2.48 trillion as against the N142.46 billion offered by the apex bank.

The latest auction result of the CBN also revealed that the 182-day NTBs recorded total subscription of N58.18 billion against the N1.56 billion offered with allotment of N25.58 billion.

In addition, the 91-day NTBs had an offering of N17.61 billion, but recorded a subscription of N76.81 billion with the CBN’s allotment at N29.83 billion.

THIISDAY’s findings showed that the total offered amount stood at N161.32 billion as investors’ subscription stood at N2.62 trillion, leaving the CBN with N1.19 trillion total allotments in the final NTB auction for this March 2024.  

The auction results, however, revealed that the bid range for 364-day stood at 16.2390-25.4900 per cent, as the subscription levels for the 364-day NTB was robust, reflecting heightened investor appetite amidst the current economic landscape.

Analysts had expressed that the recent auction by CBN represented a move by the apex bank to address liquidity in the financial system.

Commenting on yesterday’s auction, the Managing Director, Highcap Securities Limited, Mr. David Adnori, said the performance of the one-year bills showed that investors had confidence in the current government and the reforms it had embarked on.

He said, “Firstly, the investors are seeking higher rates for funding due to CBN signalling further tightening due to accelerating inflation and other factors. Secondly, interest seems skewed towards the longer end of the curve which is an indication of confidence in the government and its reforms.

“Also, the massive over–subscription shows the significant system liquidity.”

For the 182-Day NTBs, the bid range was at 16.0000-22.0000 and 91-Day NTBs bids stood at 15.0000-22.0000 per cent.

This brings the stop rate on the 364-Day NTBs at 21.12 per cent. The stop rate on the 182-day NTB works out to a yield of 17 per cent and the stop rates on the 91-day NTBs stood at 16.24 per cent

The CBN governor, Mr. Olayemi Cardoso had promised investors higher rates as apex bank tackled  inflation rate.

On the backdrop of rising inflation, the Monetary Policy Committee of the CBN raised interest rate or Monetary Policy Rate (MPR) by  200basis points  to 24.75per cent from   the previous  22.75per cent.

Also, with an inflation rate of 31.7per cent as of February 2024, a stop rate of 21.12per cent for the 364-day bills is indicative of a negative yield of about 10.58per cent.

However, there are also theories that the attractive returns on the bills may see Nigeria’s inflation reverse trend a bit.

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