The Central Bank of Nigeria (CBN) conducted a successful auction on March 13, 2024, selling N161.5 billion worth of Nigerian Treasury Bills (NTBs) across various maturities.
The strong demand observed in the auction signals sustained confidence among investors in the Nigerian government’s debt instruments.
A breakdown of the auction reveals significant investor interest across different tenors:
– For the 91-day tenure, the CBN offered N728.17 million, witnessing total subscriptions of N85.51 billion. An allotment of N5.73 billion was made at a stop rate of 16.239%, indicating robust demand for short-term securities.
– The 182-day bills, offered at N918.38 million, garnered subscriptions worth N49.65 billion, resulting in an allotment of N4.92 billion. The flat stop rate of 17.000% suggests market expectations for stability in the rate environment.
– The highest demand was observed for the 364-day bills, with an offer of N159.85 billion and subscriptions totaling N1.36 trillion. The CBN allotted N150.85 billion at a stop rate of 21.1240%, reflecting investors’ appetite for longer-term bills despite the higher yield.
Insights from the auction highlight the CBN’s monetary policy objectives of curbing inflation and stabilizing the exchange rate.
The significant oversubscription, particularly in longer tenors, indicates investors’ pursuit of higher returns and willingness to engage with extended maturities, albeit with a risk premium.
The variation in stop rates across tenors offers valuable insight into investor sentiment regarding short-, medium-, and long-term economic outlooks. While the lower stop rate on the 182-day bill suggests expectations of rate stability, the higher rate on the 364-day bill may reflect a cautious stance towards potential economic uncertainties.
Investors’ diversified demand across different maturities underscores strategic positioning for various investment horizons and indicates a healthy trading environment in the Nigerian debt market.
