N143 Billion Treasury Bills Auction Records 47% Oversubscription – CBN

The Central Bank of Nigeria’s (CBN) Treasury Bills worth N143.88 billion for a 1-year tenor, which was auctioned on Wednesday, 25th of May 2022, accumulated a total subscription of N210.82 billion, representing 147% of the intended capital raise.

According to the result of the auction, the stop rate for the 364-day Tbills was 6.49%, which is higher than the 4.7% marginal rate recorded in the previous auction.

The apex bank recorded a total subscription of N236.97 billion for the three tranches of Tbills auctioned as against the N153.03 billion intended offer. This represents a 155% subscription rate, while the final aggregate allotment was N173.48 billion.

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A further breakdown of the report showed that the 91-day treasury bill recorded a subscription rate of 444%, while the 182-day bill was undersubscribed at 61%.

The oversubscription of the 91-day and 364-day treasury bills (NTBs) shows that Nigerians are still much interested in fixed security instruments, especially given the level of volatility across various investment portfolios.

Recall, that the Central Bank of Nigeria changed to a more hawkish monetary stand in its last monetary policy meeting as the MPR was raised to 13% after adopting an expansionary policy direction in the last two years.

The apex bank added that the rate change was necessary given growing inflationary pressure in the country as Nigeria’s headline inflation climbed to 16.82% in April 2022.

Although the Nigerian stock market has printed impressive returns year-to-date, Government securities are more guaranteed and safer for investors. The recent rise in interest rate presents more incentives for more subscriptions.