T-bills: Investors Defy Interest-rate Crash, Invest N533.93bn
Investors have oversubscribed to the Treasury Bills auctioned by the Central Bank of Nigeria to the tune of N383bn (or 254 per cent), despite a further crash in interest rates.
The CBN recorded a total subscription of N533.93bn on the N150.6bn worth of treasury bills offered on Wednesday.
Interest rates crashed further from 7.7998 per cent, nine per cent and 10 per cent recorded on the 91-day, 182-day and 364-day tenors, respectively, at the last auction, to 6.4950 per cent, 7.23 per cent and 8.37 per cent.
On the 91-day tenor, a total of N24.37bn was offered while the CBN allocated N20.37bn.
Another N19.16bn was allotted out of the total N107.63bn subscriptions recorded on the 182-day tenor while the CBN allotted N111.07bn from the N319.42bn subscriptions received on the 364-day tenor.
An investor, Tunde Alao, said he feared that the treasury bills interest rates would soon be lower than saving account rates.
He said with the Monetary Policy Rate (also known as the benchmark interest rate) unchanged and a continued increase of interest rates in the Open Market Operations, the story would become a tale of two markets.
A finance analyst, Kalu Aja, said the crash in the rates would induce banks to lend more and also make those with huge idle funds begin to think of investing in the real sector.
He added that it would also close avenues for “rent-seeking” and obnoxious fees, noting that the banks would find ways to deploy their capital.
Aja, however, urged investors not to invest because of returns but to match their investment objectives and risk profile available to asset classes.
Meanwhile, investors in the equities market recorded gains on Thursday as the market capitalisation of equities increased to N12.947tn from N12.930tn on Wednesday.
The benchmark index ended on the green note as the All Share Index inched higher by 13 basis points to 26,824.50bps, leading to a slight improvement in year-to-date loss at -14.7 per cent.
Analysts at Afrinvest Securities Limited said the market performance was driven by major gains in FBN Holdings Plc, Access Bank Plc and Guaranty Trust Bank Plc.
Activity level strengthened as both volume and value traded increased by 60 per cent and 15.9 per cent to settle at 303.822 million units and N1.720bn, respectively.
The most traded stocks by volume were Law Union and Rock Insurance Plc (151.7 million units), United Bank for Africa Plc (20.4 million units) and Access Bank (12.4 million units) while the most traded stocks by value were Nestlé Nigeria Plc (N326.3m), Dangote Cement Plc (N292.7m) and Zenith Bank Plc (N193.1m).