Nigeria experiences oversubscription of its one-year treasury bill
During the Primary Market Auction conducted by the Central Bank of Nigeria on Wednesday, Nigeria's one-year treasury bill experienced an oversubscription of 300%.
Results from the auction revealed that the one-year T-bill garnered significant interest from investors, with total offers reaching N1.87 trillion for the N600 billion on offer. The allotment amounted to N908.75 billion, with stop rates set at 19%. Investors submitted bids with interest rates ranging from 13% to 29.9%.
The auction's objective was to roll over maturing Nigerian Treasury Bills valued at N1 trillion. It covered maturities across three different tenors: a 91-day bill with N200 billion on offer, a 182-day bill with an additional N200 billion, and a 364-day bill with the highest value on offer at N600 billion.
At the conclusion of the auction, the 91-day bill received N39.90 billion in offers, all of which were sold. The 182-day bill garnered N76.83 billion in subscriptions, with N51.35 billion allotted.
Regarding the day's auction, Tunde Amolegbe, the Managing Director of Arthur Steven Asset Management, commented that the strong performance of the one-year bills indicates investors' confidence in the present government and the ongoing reforms.
He stated, "Primarily, investors are pursuing elevated rates for funding as the CBN signals additional tightening in response to escalating inflation and other factors. Secondly, interest appears to be inclined towards the longer end of the curve, signifying confidence in the government and its ongoing reforms. Additionally, the substantial oversubscription indicates significant system liquidity."
Analysts noted that the auction signifies a strategy by the central bank to oversee the nation's debt commitments and tackle liquidity challenges within the financial system.
In the January auction, the CBN dispensed treasury bills amounting to N381.2bn across different tenors: 91, 182, and 364 days. The recorded interest rates for these maturities were five per cent for the 91-day bills, 7.15 per cent for the 182-day bills, and 11.54 per cent for the 364-day bills, respectively.
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