Breaking: Nigeria’s One-Year Treasury Bill Oversubscribed by 300% at Central Bank Auction

Breaking: Nigeria’s One-Year Treasury Bill Oversubscribed by 300% at Central Bank Auction

At a remarkable auction conducted by the Central Bank of Nigeria (CBN), Nigeria’s one-year treasury bill witnessed an overwhelming oversubscription of 300 percent. The investors presented an astounding offer of N1.87 trillion for the available N600 billion. The auction successfully allotted a total of N908.75 billion, with stop rates recorded at an elevated 19 percent.

Unprecedented Participation and Clear Indications

The range of interest rates bid by investors spanned between 13 percent and 29.9 percent. This auction was devised to roll over the maturing Nigerian Treasury Bills, which accumulated to a staggering N1 trillion. The auction comprised three distinct tenors: 91-day bills with N200 billion on offer, 182-day bills with N200 billion, and the 364-day bills commanding the highest value at N600 billion.

A full N39.90 billion was offered for the 91-day bills, all of which were sold, while the 182-day bills received N76.83 billion in subscriptions. Out of this, N51.35 billion was allotted. The 364-day treasury bills, however, stole the show with a stop rate spiking to 19 percent per annum, reflecting the shift towards a more hawkish monetary policy.

A Strategic Move and Investor Confidence

Tunde Amolegbe, Managing Director of Arthur Steven Asset Management, interpreted this unprecedented demand for the one-year bills as a glowing indication of investor confidence in the government and the ongoing reforms. The interest in these bills, he suggested, was largely spurred by the Central Bank of Nigeria’s indications of further tightening due to escalating inflation. The skew towards longer-term investments only serves to reinforce this confidence.

The auction is viewed as a strategic maneuver by the Central Bank of Nigeria to manage the country’s debt and bolster financial system liquidity. The higher interest rates offered were a bid to stem the decline of the naira, leading to a significant rise in treasury bill yields across short, medium, and long-term tenors.

A Brighter Economic Outlook

With the yield on the one-year treasury bill soaring to a high of 20 percent, the results of this auction have yet to be published by the Debt Management Office. However, the figures already point towards a brighter economic outlook. The one-year bill worth N600 billion saw a massive N1.8 trillion subscription, with the CBN selling N908.7 billion, indicating an extraordinary 300% oversubscription. The higher interest rates are expected to entice foreign portfolio investors and stabilize the naira in the Forex market.

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