Nigerian Treasury Bills Auction Shatters Records with 283.42% oversubscription

The Central Bank of Nigeria (CBN) has announced a staggering 283.42 percent oversubscription of the 364-day Treasury Bills auction, which took place on January 8, 2025.

Persecondnews reports that the total value of the oversubscription stood at N1.47 trillion, exceeding the initial offer of N385 billion.

The remarkable outcome underscores the immense confidence investors have in Nigeria’s economy and the attractiveness of Treasury Bills as a viable investment option.

The auction results revealed significant interest in the longer-term securities, with the 364-day bills attracting N1.47 trillion in subscriptions.

In contrast, the 91-day and 182-day bills received N22.94 billion and N20.81 billion, respectively. The stop-out rates for the 91-day, 182-day, and 364-day bills were 18%, 18.5%, and 22.62%, respectively.

These rates indicate the minimum interest rates at which investors were willing to lend to the government.

The surge in demand for the 364-day bills represents a 2,723% increase in interest, reaching N1.4 trillion. Similarly, interest in the 91-day bills rose by 725.4% to N22.9 billion. However, the 182-day bills saw a sharp decline of 77.9% in interest, down to N20.8 billion.

This shift in investor preference is largely driven by the rising interest rate environment, which has made longer-term securities more attractive.

In November 2024, the CBN raised its Monetary Policy Rate by 25 basis points to 27.50%, aiming to combat inflation, which stood at 33.88% at the time.

This move, combined with six consecutive interest rate hikes, has driven investors towards high-yield government instruments like Treasury Bills as a hedge against inflation.

The value of Treasury Bills is closely tied to interest rates, making them more attractive when rates rise.

The CBN’s Treasury Bills auction has demonstrated the significant appetite for government securities, particularly longer-term instruments.