The Central Bank of Nigeria (CBN) mobilized ₦1.32 trillion through Treasury bill auctions in November 2024, marking a significant 190% increase compared to the ₦456.57 billion raised in October. This surge reflects heightened market activity and investor interest in Naira-denominated assets amid rising inflation and interest rates.
The auction results showed a climb in spot rates, driven by inflation at 33.88% in October and an interest rate of 27.50%. Despite this, the real return remained negative at -6.38%. Investors seeking to hedge against inflation have shown strong demand for risk-free instruments like Treasury bills, though some analysts caution that the current elevated yields may not be sustainable.
In the November auctions, the CBN offered₦1.1 trillion worth of Treasury bills but received subscriptions totaling₦1.9 trillion, reflecting a robust appetite for the instrument. Improved financial system liquidity supported this trend, with liquidity rebounding to ₦518.9 billion from a deficit position in October.
The recovery was fueled by inflows from Treasury bill maturities (₦1.3 trillion), Open Market Operation (OMO) repayments (₦7.3 billion), and the Standing Lending Facility (₦8.3 trillion).
The CBN ultimately allotted ₦1.3 trillion to investors, with significant preference for longer-term bills. Analysts noted higher demand for 364-day instruments, which had a bid-to-offer ratio of 1.7x, compared to 0.8x for 91-day notes and 0.7x for 182-day notes.
Stop rates also climbed to 18.0% for 91-day bills, 18.5% for 182-day bills, and 23.5% for 364-day bills, up from October’s respective rates of 17.0%, 17.5%, and 19.9%.
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