CBN Sells Treasury Bills at 2.2% Amid Spike in Demand

By Dipo Olowookere

Treasury bills went for as low as 2.20 percent at the primary market on Wednesday, April 1, 2020, Business Post reports.

It was observed that the demand for the Nigerian Treasury Bills (NTB) significantly increased on April Fools’ Day when the Central Bank of Nigeria (CBN) auctioned the debt instrument to investors.

Data obtained by this newspaper showed that the subscription level was 168.7 percent, with most of the bids for the long-dated bills, which was oversubscribed by 164.3 percent.

Business Post reports that treasury bills worth N95.7 billion were auctioned by the central bank during the exercise, but subscriptions valued at N161.4 billion were received.

An analysis of the exercise showed that the CBN offered the bills across the usual three maturities, with N10 billion worth of 91-day, N17.6 billion worth of 182-day and N68.1 billion worth of 364-day instruments up for grabs.

When the bids came in, investors staked N20.7 billion on the three-month tenor, indicating a subscription level of 207 percent; N28.8 billion on the six-month tenor, representing a subscription level of 163.6 percent; and N111.9 billion on the 12-month tenor, showing a subscription level of 164.3 percent.

However, when the allotments were made by the apex bank, it sold N10.0 billion worth of the 91-day maturity at 2.20 percent, lower than 2.60 percent of the previous session; N17.60 billion worth of the 182-day maturity at 3.20 percent, lower than 3.40 percent of the last session; and N68.1 billion worth of the 364-day maturity at 4.30 percent, lower than 4.60 percent of the earlier auction.

The huge demand for the investment instrument is anticipated to continue to spike as the coronavirus disease further negatively impact on the economy.

On Thursday, the central bank is expected to sell its own treasury bills to offshore investors through Open Market Operations (OMO).

However, rates are anticipated to remain in double digits as the apex bank hopes to attract foreign exchange through the exercise to shore up the country’s external reserves, which have been depleting lately.