Central Bank of Nigeria Raises N1.47 Trillion Through 364-Day Treasury Bills at a 22.6% Stop Rate

Ejiga Victor — Thu, 09 Jan 2025 10:01:34 +0000

Quick Read: (CBN) recorded a 283.42% oversubscription, totaling N1.47 trillion, for its 364-day Treasury Bills at a 22.62% stop rate during the January 8, 2025, auction. Investor demand surged for longer-term securities amid rising interest rates and inflationary pressures. Comparatively, subscriptions for 91-day and 182-day bills were N22.94 billion and N20.81 billion, respectively. This reflects a shift toward high-yield government instruments as a hedge against inflation.

Central Bank of Nigeria (CBN), acting on behalf of the Debt Management Office (DMO), has announced an impressive 283.42% oversubscription for its 364-day Treasury Bills, totaling N1.47 trillion, at an auction held on January 8, 2025.

Auction Overview

On January 6, 2025, the CBN disclosed plans to issue Treasury Bills across three tenors: 91, 182, and 364 days. The total offering included:

N50 billion for the 91-day bills
N80 billion for the 182-day bills
N385 billion for the 364-day bills

Subscription Results

The auction results revealed a mixed demand across the tenors:

91-day bills: Subscriptions totaled N22.94 billion, with a stop-out rate of 18%.
182-day bills: Subscriptions amounted to N20.81 billion, with a stop-out rate of 18.5%.
364-day bills: Subscriptions soared to N1.47 trillion, with a stop-out rate of 22.62%.

Pricing and Maturity Details

Investors were offered Treasury Bills at N1,000 per unit, with a minimum subscription of N5,000 and increments of N1,000 up to a maximum of N50 million. The maturity dates for the bills are as follows:

91-day bills: April 10, 2025
182-day bills: July 10, 2025
364-day bills: January 8, 2026

Allocations were finalized on January 9, 2025, with the following allotments:

91-day bills: N21.30 billion
182-day bills: N20.48 billion
364-day bills: N473.20 billion

Surge in T-Bill Demand Amid Rising Interest Rates

The significant oversubscription for the 364-day bills reflects heightened investor interest in longer-term securities. Comparatively:

Interest in the 364-day bills surged by 2,723%, reaching N1.47 trillion.
Interest in the 91-day bills increased by 725.4%, totaling N22.9 billion.
Interest in the 182-day bills declined sharply by 77.9%, falling to N20.8 billion.

This trend aligns with rising interest rates, as investors seek high-yield instruments to hedge against inflation.

Monetary Policy Impact

In November 2024, the Central Bank of Nigeria raised its Monetary Policy Rate (MPR) by 25 basis points, bringing it to 27.50%. This marked the seventh consecutive hike aimed at combating inflation, which stood at 33.88% in the same month.

The series of rate increases has steered investors toward government-backed securities, like Treasury Bills, which offer attractive returns in a high-inflation environment.

Conclusion

The oversubscription for the 364-day Treasury Bills underscores robust investor confidence in government securities as a viable investment option. With rising interest rates and persistent inflationary pressures, Treasury Bills remain a preferred choice for investors seeking stability and high yields.

The post Central Bank of Nigeria Raises N1.47 Trillion Through 364-Day Treasury Bills at a 22.6% Stop Rate appeared first on Venture Deals Africa.