The Central Bank of Nigeria (CBN) witnessed an overwhelming display of investor confidence in the final issuance of Nigerian Treasury bills for 2023, as the December market auction recorded an impressive oversubscription of N970 billion.
Despite the CBN offering N67.02 billion in treasury bills, the total subscription reached an astounding N1.037 trillion during the auction.
However, the CBN, in setting stop rates at 7%, 10%, and 12.24% for the 91-day, 182-day, and 364-day tenured bills respectively, only allotted N317 billion despite the massive subscription.
Breakdown:
- 91-Day Bills (Maturing on March 28, 2024):
- Offering: N1.747 billion
- Subscription: N18.807 billion
- Oversubscription: N17.060 billion
- Stop Rate: 7%
- Allotted: N17.607 billion
- 182-Day Bills (Maturing on June 27, 2024):
- Offering: N17.156 billion
- Subscription: N50.397 billion
- Oversubscription: N19.726 billion
- Stop Rate: 10%
- Allotted: N30.671 billion
- 364-Day Bills (Maturing on December 26, 2024):
- Offering: N48.115 billion
- Subscription: N968.2 billion
- Oversubscription: N920.09 billion
- Stop Rate: 12.24%
- Allotted: N268.74 billion
The significant oversubscription in the December 2023 auction underscores investors’ eagerness to invest in Nigerian Treasury bills, driven by perceived safety and attractive yields compared to other investment options.
Looking ahead to 2024, these figures are anticipated to impact the inflation rate and system liquidity. The oversubscription, coupled with the CBN’s rate management, suggests an attempt to strike a balance between favorable borrowing rates and addressing inflationary pressures—acknowledging that controlling inflation is a key challenge and top priority for the bank in the coming year.
The month-by-month decline in treasury bill yields is seen as a positive sign for the CBN, reflecting the bank’s effective regulation of system liquidity and market conditions. However, sustaining this trend while ensuring economic growth and stability remains a delicate balancing act for the central bank. Investors will be closely watching the CBN’s strategies in the evolving financial landscape in 2024.
By Delino Gayweh
Serrari Financial Analyst
December 28 , 2023
