Nigerian treasury bills oversubscribed 400% as investors bet on government, increased yield

Nigeria’s central bank Wednesday saw its fortnightly treasury bills auction oversubscribed 400 percent as total subscription outstripped the N140.9 billion it originally planned to raise by N418.1 billion.

Actual subscription stood at N559 billion.

However, the Central Bank of Nigeria could only allot bills worth N215.88 billion at the auction, which is N75 billion more than envisaged with the one-year paper accounting for most of the debt on issue.

Specifically, the monetary authority was able to raise ₦22.78 billion from the three-month tenored bills at 13.15 percent, ₦24.74 billion from the six-month bills at 16.8 percent and ₦168.36 billion from the one-year bills at 17 percent. Investors bided as high as 18.9 percent for the one-year debt and as low as 13.15 percent for the three months note.

Financial analysts and traders attributed the oversubscription to the current high yield on treasury bills and investors betting on safety just as more foreign investors getting interested in the positive economic data of the country.

Traders also noted that foreign currencies, especially the dollars were sold off in anticipation of the auction, which helped boost demand of the bills leaving foreign exchange market liquidity worse off at close yesterday.

The dollar actually sold at ₦365/$1 at the Investors/exporters window, while at the parallel market it exchanged at ₦367/$1.

The CBN issues treasury bills twice a month to help the government fund its budget deficit, support commercial lenders in managing liquidity and curb inflation.