The last set of Nigerian Treasury bills to be issued in 2023 enjoyed massive investors’ confidence as the CBN recorded an oversubscription of N970 billion during the December market auction.
The CBN offered N67.02 billion in treasury bills, however, recorded a subscription of N1.037 trillion during the December market auction.
Despite the N1.037 trillion subscription, only N317 billion was allotted as the CBN set the stop rates at 7%, 10%, and 12.24% for the 91-day, 182-day, and 364-day tenured bills respectively.
Breakdown
- The 91-day bills, with a maturity date of March 28, 2024, had an offering of N1.747 billion, however, recorded a subscription of N18.807 billion, representing an oversubscription of N17.060 billion.
- Bids for the 91-day NT bills ranged between 3.3% and 17.01%, but the stop rate was 7%, thus, only N17.607 billion was allotted.
- The 182-day bills with a maturity date of June 27, 2024, had an offering of N17.156 billion, however, a subscription of N50.397 billion was recorded, representing an oversubscription of N19.726 billion. The bids ranged between 6.5% and 13.3%, but with a stop rate of 10%, the total allotted was N30.671 billion.
- The 364-day bills with a maturity date of December 26, 2024, had an offering of N48.115 billion. It was the most subscribed instrument with a subscription of N968.2 billion, representing an oversubscription of N920.09 billion.
- Bids for the 364-day bills ranged between 9.87% and 17.97%, however, with a stop rate set at 12.24%, only N268.74 billion were allotted.
What you should know
The oversubscription during the December 2023 auction signals that investors are eager to invest in Nigerian Treasury bills due to their perceived safety and attractive yields compared to other investment options.
Looking forward to 2024, these figures are expected to have an impact on the inflation rate and system liquidity.
Given the oversubscription and the CBN’s management of rates, it appears that the apex bank is trying to strike a balance between borrowing at favourable rates and managing inflationary pressures. Even as controlling inflation remains a significant challenge and top priority for the bank in 2024.
Also, the month-by-month decline in the treasury bill yields is a positive sign for the CBN as it is a display of the bank’s ability to effectively regulate system liquidity and market conditions.
However, sustaining this trend while ensuring economic growth and stability remains a delicate balancing act for the central bank.
