Last week, banks and other investors poured a massive N2.54 trillion into Nigerian Treasury Bills (T-bills), reflecting a growing interest in investments tied to the naira. This took place during a Treasury bill auction organized by the Debt Management Office (DMO) on behalf of the Central Bank of Nigeria (CBN).
The goal was to raise N530 billion, but the auction was heavily oversubscribed, showing just how eager investors are for these short-term government-backed securities. Here’s what happened at the auction:
- The government offered T-bills in three durations: 91 days, 182 days, and 364 days.
- The amounts on offer were N50 billion, N80 billion, and N400 billion, respectively.
- However, investors showed a clear preference for the 364-day bills, which attracted the majority of the funds.
By the end of the auction, total bids hit N2.54 trillion—nearly five times the amount initially offered—compared to N1.52 trillion in the previous auction. This resulted in a bid-to-offer ratio of 4.8x, much higher than the previous 3.0x ratio. Despite the overwhelming demand, the DMO only sold N756.01 billion worth of bills to investors, carefully managing liquidity in the banking system.
Here’s the breakdown of what was sold:
- 91-day bills: N26.45 billion.
- 182-day bills: N17.09 billion.
- 364-day bills: N712.48 billion.
Interest rates (or “spot rates”) for these T-bills stayed mostly steady:
- 91-day bills: 18.00%.
- 182-day bills: 18.50%.
- 364-day bills: 21.80% (down from 22.62% in the last auction).
Investors are flocking to these bills because they expect the CBN to raise its benchmark interest rate at the upcoming monetary policy meeting in February, making T-bills an attractive and relatively safe way to earn higher returns.
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