The Central Bank of Nigeria (CBN) raised N284.26 billion from yield-hungry investors in its latest Nigerian Treasury Bills (NTBs) auction on Wednesday, June 26, 2024.
According to the auction result by the Debt Management Office (DMO), the auction attracted significant investor interest, with the total subscription amounting to N773.98 billion, far surpassing the total offer of N228.72 billion.
As an instrument to implement monetary policy, the CBN can control the money supply in the economy by issuing or redeeming Treasury Bills (T-Bills). Also, T-Bills provide a means for the government to raise short-term funds to finance its operations, including bridging budget deficits.
In the latest auction, there was an increase of 417.1% in the amount offered when compared to the N44.23 billion offered in the previous auction, which was held on June 13, 2024.
Also, total subscriptions recorded 89.8% increase from N407.76 billion while total sales rose by 414.7% from N55.23 billion.
The latest auction saw a significant subscription rate, surpassing the offer amount across all tenors, indicating robust demand from investors.
The auction featured three tenors: 91-day, 182-day, and 364-day bills.
The significant oversubscription across all tenors demonstrates strong investor confidence in Nigerian Treasury Bills as a safe investment avenue amidst prevailing economic conditions.
The high subscription rate, particularly for the 364-day bills, reflects a preference for longer-term securities, likely driven by expectations of future economic stability and favourable returns.
The range of bids and the stop rates across the different tenors suggest competitive bidding, with investors keen on securing these government securities.
The stop rates indicate the yield investors are willing to accept, and the competitive rates achieved in this auction are indicative of the NTBs’ attractiveness.
Nairametrics earlier reported that Nigeria recorded a total NTB debt of N10.4 trillion in the first quarter of 2024, a 60% rise in just three months.
This surge occurred as the DMO, via the central bank, issued several T-Bills in Q1 2024 as it relies on a combination of monetary and fiscal policy to fight inflation while also providing a source of funding to meet the government’s short-term expenditure.
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