Nigeria’s Treasury Bills Auction Oversubscribed by 254.23 Per Cent

•Naira maintains slide, now N1,308/$ on official market, N1,300/$ on parallel market

Nume Ekeghe and Kayode Tokede

The Nigerian Treasury Bills (NTBs) issued by the Central Bank of Nigeria (CBN) yesterday recorded an oversubscription of 254.23 per cent as investors’ total subscription stood at N531 billion as against the N142.57 billion offered.

This comes just as the downward trajectory of the naira on both the official and parallel FX market continued for the third consecutive day. Specifically, on the Nigerian Autonomous Foreign Exchange (NAFEM) window, the naira closed at N1,308.52/$ yesterday, compared with the N1,300/$ it closed on Tuesday. Also, on the parallel FX market, the naira depreciated to N1,300/$ yesterday, lower than the N1,270/$ it was on Monday.

However, daily turnover on the NAFEX surged by 47.8 per cent to reach $197.54 million yesterday, compared to $133.65 million recorded on Tuesday.

However, on the NTBs’ auction, the CBN eventually allocated N362.45 billion to investors to complete its NTBs auction for April 2024.

Investors sustained strong demand for the 364-day NTB as it was oversubscribed by 595.94 per cent to N725.66 billion, as against the N121.77 billion offered. 

The CBN allocation for the 364-day NTB stood at N333.98 billion after conducting its auction, reflecting heightened investor appetite amidst the current economic landscape.

On the other hand, for the 182-day NTB, the result revealed that its oversubscription grew by 104.09 per cent when investors subscribed N13.48 billion from the offered N12.95 billion, leaving the CBN to allocate N11.99 billion.

Finally, the 91-day NTB had an offering of N7.85 billion, but recorded a subscription of N18.7 billion with the CBN’s allotment at N16.48 billion.

The 91-day NTB had the second-highest subscription of about 238.36 per cent.

Data seen by THISDAY showed that the stop rate on the 91-day, 182-day and 364-day NTBs remained flat compared to auction of April 19, 2024. 

The auction results, showed that the stop rate for 364-day stood at 20.7000 per cent, the 82-day NTB at 17 per cent and 91-day NTB at 16.24 per cent.

The auction results however, revealed that the bid range for 364-day stood at 19.0000-25.7600 per cent. Bid range for 182-day and 91-day NTBs was at 15.0000-21.0000 per cent and 15.0000- 18.5000 per cent, respectively.

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

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

Also, with an inflation rate of 33.2per cent as of March 2024, a stop rate of 21.12per cent for the 364-day bills was indicative of a negative yield of about 12.5per cent.

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

Managing Director, Highcap Securities Limited, Mr. David Adnori, said the performance of the 364-day NTB showed that investors have confidence in the current government and the reforms it had embarked on.

He explained, “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.”

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