According to a report between January and August 2024, the Central Bank of Nigeria raised a whopping N9.27 trillion worth of Nigerian Treasury Bills across its auctions.
The amount raised so far in eight months indicates continuing confidence among investors in the Nigerian government’s debt instruments has also triggered the request of investors for higher returns and long-time maturities.
The Central Bank of Nigeria seeks to control soaring inflation and stabilize the foreign exchange market by implementing a stricter monetary policy through increased interest rates and large NTBs auction, further promoting a more balanced economic environment.
Investors are seeking for higher returns and are open to longer maturity profiles as the total sale of N 9.27 billion in NTBs in eight months of 2024 highlights a strong demand for Nigerian sovereign debt with a significant over-subscription for longer tenors.
The variation in stop rates across different tenors provides more insight into the investor sentiment about short, medium and long term economic prospects. The lower stop rate on the 182-day bill suggests expectations of stable interest rates, while the higher rate on the 364- day bill may reflect concerns about potential future economic certainties.
The 364-day NTBs saw the highest demand in the eight-month period, with an offer of N3.36 trillion and total subscriptions reaching N28.33 trillion, surpassing other tenors. Despite this strong interest, the CBN allocated N8.1 billion at a stop rate of 20.9 percent as of August 21, 2024, up from 8.399 percent in January 2024. This shift indicates that investors are prepared to accept longer term bills with higher yields, which reflect the risk premium associated with extended maturities.
