Nigerian Treasury Bills issued on Wednesday, November 8, 2023, recorded an oversubscription of 182.4%, as the CBN recorded subscriptions of N875.8 billion as against the offered N310 billion.
The 91-day NT-bills had an offering of N4.552 billion, however, recorded a subscription of N16.047 billion. The 182-day NT-bills recorded a subscription of N32.960 billion against the offered N5.429 billion. While the 364-day NT-bills recorded a subscription of N826.787 billion against the offered N300.162 billion.
There was also an increase in the stop rates across the three tenors, for the 91-day bills, there was a 100 basis points increase to 7.000% from the previous 5.999%. There was a 200-bps increase for the 182-day bills to 11% from the previous 9%, and for the 364-day bills, it was a 375-bps increase from the previous 13% to 16.75%.
In spite of the oversubscription, the total amount raised was N497.2 billion. Also, with an inflation rate of 26.72% as of September 2023, a stop rate of 16.75% for the 364-day bills is indicative of a negative yield of about 9.97%.
However, there are also theories that the attractive returns on the bills may see Nigeria’s inflation reverse trend a bit. Even as the Yemi Cardoso-led CBN is projected to further hike interest rates during the next MPC meeting on November 25 and 26.
Adetola Freeman, FBS’ Regional Analyst for Africa noted,
“Theoretically, we could see inflation drop temporarily. But given the current state of the economy, the impact may not last beyond a few weeks.
“The other possibility is that the inflation rate remains unchanged or increased by a fraction due to the effect of other policies mitigating the supposed outcome of the T-Bills auction.”
The effect of the impressive returns in the treasury bills market is also expected to be felt today in the NGX.
The Nigerian Stock Exchange has had a remarkable year, with a whopping 38% year-to-date return so far. Things got even better last week as the ASI surged to a remarkable 70,000. But with the FGN 1-year tenor bills offering a record 16.75% yield rate, it is predictable that investors will likely shift some of their funds from stocks to fixed-income investments.