The Federal Government, through the Central Bank of Nigeria, raised a total of N284.26 billion in the latest Nigerian Treasury Bill auction.
This follows as its T-Bills debts surged to N10.4 trillion between December 2023 and March 2024, representing a 60% increase in just three months, according to The Punch.
According to the Debt Management Office’s auction results, which were cross-checked against data released on the CBN website on Thursday, the auction drew tremendous investor interest, with the overall subscription amounting to N773.98 billion, significantly above the entire offer of N228.72 billion.
The most recent outcome suggests continued robust demand from yield-hungry investors, as well as a source of money to support the government’s short-term spending needs.
Recall that the government also raised N297 billion at the June bond sale, which is only around 66% of its objective and 22% less than the N380.77 billion raised in May.
The bonds, being crucial instruments for the government’s debt management strategy, serve multiple purposes, including providing investors with a relatively safe investment option, assisting in managing the country’s debt profile, and facilitating efficient fund management.
Treasury bills and FGN bonds are classed as risk-free, or zero-risk because the government is considered to always pay its debts. If not, they can print money to repay it.
The most recent sale analysis showed a 417.1 percent rise in the amount offered as compared to the N44.23 billion offered in the previous auction on June 13, 2024.
Total subscriptions increased by 89.8 percent from N407.76 billion, while total sales grew by 414.7 percent from N55.23 billion.
A further breakdown showed that the auction featured three tenors of 91-day, 182-day, and 364-day bills.
The 91-day tenor, maturing on September 25, 2024, had an offer of N29.83 billion but received subscriptions totaling N36.29 billion, with an allotment of N28.15 billion. The range of bids for this tenor was 15.98% to 24.00%, with a stop rate of 16.30%.
Similarly, the 182-day bills, which mature on December 25, 2024, received an offer of N30.67 billion against subscriptions of N40.58 billion and an allotment of N36.44 billion. The bid range was 17.00% to 21.00%, with a stop rate of 17.44%.
The 364-day bills, maturing on June 25, 2025, had the highest offer at N168.21bn. It recorded an overwhelming subscription of N697.11bn and an allotment of N219.67bn. The bid range for this tenor was 16.00 per cent to 25.00 per cent, with a stop rate of 20.68 per cent.
The large oversubscription across all tenors reflects high investor confidence in Nigerian Treasury Bills as a secure investment option in the current economic climate.
