According to the auction result report, the Central Bank of Nigeria (CBN) recently concluded a successful auction of Nigerian Treasury Bills (NTBs) on March 27, 2024, which sold a substantial N1.64 trillion.
The allure of higher-stop rates has attracted significant investor attention, indicating confidence in Nigeria’s economic instruments.
During the auction, three categories of NTBs were offered, varying tenors of 91 days, 182 days, and 364 days. The auction, held on March 27, 2024, was followed by the allotment date on March 28, 2024.
91-Day Bills – Moderate Demand with Competitive Stop Rate
The shortest tenor bills, the 91-Day NTBs, witnessed moderate demand, offering an amount of N17.606 billion, with a subscription of N76.812 billion. On June 27, 2024, these bills displayed a cautious investor approach, with bids ranging from 15.0000% to 22.0000%. The stop rate for this category was set at a competitive 16.2400%.
182-Day Bills – Strong Demand Reflects Market Optimism
The 182-day NTBs garnered high demand, offering N1.560 billion and attracting a hefty subscription of N58.184 billion. Maturing on September 26, 2024, these medium-term bills exhibited robust market optimism, with bids ranging from 16.0000% to 22.0000%. The final stop rate settled at 17.0000%.
364-Day Bills – Record Subscriptions Demonstrate Investor Confidence
The longest tenor, the 364-Day bills, witnessed a remarkable turnout, offering N142.162 billion and attracting a staggering subscription of N2.483 trillion. These bills, maturing on March 27, 2025, showcased diverse investor expectations, with bids ranging from 16.2390% to 25.4900%. The stop rate for this category was set at 21.5000%.
Key Points to Note
The successful auction and heightened interest in NTBs underscore a strong investor appetite for higher interest rates, contributing to Nigeria’s fiscal stability. The CBN’s strategic decision to tighten monetary policy aims to address macroeconomic concerns and control inflation by making borrowing more expensive. Higher interest rates attract foreign investors seeking better yields, potentially stabilizing the Nigerian Naira and impacting broader economic and financial behaviours. While higher rates may increase government borrowing costs and debt servicing for individuals, they could also encourage savings and fiscal prudence. Overall, the CBN’s policy tightening seeks stability and confidence in Nigeria’s economy amidst potential challenges.
