The Nigerian government has raised a total of ₦2.51 trillion through Treasury Bills (T-Bills) and Open Market Operations (OMO) auctions as investors continue to show strong demand for lower stop rates on the one-year bill.
Speaking on CNBC Africa, Ayodeji Ebo, Managing Director of Optimus by Afrinvest, said investor appetite for government securities remains high. He noted that market participants are closely monitoring interest rate movements, given their recent unexpected trends.
“When you expect interest rates to decline, the rational thing for an investor is to lock into the longer end of the curve with the one-year bill. If rates drop during that period, those who are locked in earlier will not be affected,” he said.
The latest T-Bills auction conducted by the Central Bank of Nigeria (CBN) witnessed strong demand across all maturities, particularly the 364-day bill, which saw the highest investor interest.
The federal government initially sought to raise ₦650 billion but ultimately allotted ₦830.44 billion, reflecting significant market appetite.
91-day T-Bill: The CBN offered ₦70 billion, received ₦62.57 billion in subscriptions, and allotted ₦61.52 billion at a stop rate of 17.00%.
182-day T-Bill: The government offered ₦80 billion, attracted ₦60.05 billion in subscriptions, and allotted ₦50.95 billion at a stop rate of 17.75%.
364-day T-Bill: This long-tenured bill was the most sought-after instrument. With ₦500 billion on offer, it attracted an overwhelming ₦1.80 trillion in bids. The government allotted ₦717.97 billion, with the stop rate closing at 17.82%, down from 18.50% in February.
Ayodeji further explained that investors are playing it safe due to reinvestment risks.
“You might have to lock in your investment because reinvestment risk occurs when your investment matures. If rates are lower at the time of reinvestment, your overall returns could be reduced,” he said.
The latest auction not only exceeded the government’s initial offer by nearly ₦200 billion but also underscored investors’ preference for longer-term securities amid economic volatility.
