Investors Scramble for Nigerian Treasury Bills at 1.20%

PMA treasury bills

By Modupe Gbadeyanka

The huge appetite for treasury bills in Nigeria continued this week when the Central Bank of Nigeria (CBN) offered the debt instrument for sale.

On Wednesday, August 12, 2020, the apex bank was at the primary market to auction T-bills valued at N56.8 billion to market participants.

The investment tool was offered in three maturities like in the previous exercises; 91-day bill, 182-day bill and 364-day bill.

Details of the auction showed that the central bank offered for sale N19.8 billion of the 91-day tenor, N10.0 billion of the 182-day maturity and N27.0 billion of the 364-day tenor.

However, as it has happened in the past, investors were more than happy to pump their hard-earned money into the instrument despite its low-interest rate and rising inflation in the country.

According to the results of the exercise, the T-bills sales recorded a subscription level of 208.1 per cent as investors staked N118.2 billion on the N56.8 billion offered across the three tenors.

A breakdown showed that N30.6 billion was put on the three-month instrument, N31.1 billion was received for the six-month bill, while the 12-month instrument received N56.5 billion worth of the bids, indicating a subscription level of 154.6 per cent, 311.0 per cent and 209.3 per cent respectively.

But when the CBN was to the allotments, it sold N19.8 billion worth of the short-term note, N10.0 billion worth of the mid-term instrument and N27.0 billion worth of the long-term bill.

Business Post reports that while the stop rate for the 91-day bill was left untouched at 1.20 per cent, the rate for the 182-day bill was slashed to 1.39 per cent from 1.50 per cent, while the rate for the 364-day tenor was lowered to 3.20 per cent from 3.40 per cent.

The federal government has found a way to borrow funds locally at a very cheaper rate unlike in the past when the treasury bills were sold for almost 20.0 per cent.

The huge liquidity chasing the various government debt securities has made it possible for the rates to go down regularly.

According to analysts, with the way things are going, many investors would be willing to buy the government debt instruments at rates lower than one per cent.

Modupe Gbadeyanka is a fast-rising journalist with Business Post Nigeria. Her passion for journalism is amazing. She is willing to learn more with a view to becoming one of the best pen-pushers in Nigeria. Her role models are the duo of CNN's Richard Quest and Christiane Amanpour.

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