Investors Dive Deep: N808 Billion in Treasury Bills at 9.8%

Explore the recent surge in bids for Nigeria’s treasury bills. Understand the landscape amidst rising inflation and the appeal of risk-free investments.

In the fast-paced world of finance, the auction held on 9th August 2023 stands out.

On this day, investors boldly placed bids worth a staggering N808 billion on one-year treasury bills.

But there’s a twist: despite this massive interest, only a fraction, N148 billion, was approved.

It’s like a room filled with a hundred people, but only fifteen get the golden ticket.

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Why? The answer lies in the insatiable appetite for these short-term, risk-free investments.

A Snapshot of the Current Situation

The Nigerian financial landscape is ever-evolving.

Fresh data from the latest auction report indicates that these treasury bills, set to mature on 8th August 2024, have investors virtually scrambling for a piece of the pie.

Inflation’s Rising Tide

Picture an ever-filling balloon, ready to pop.

That’s Nigeria’s inflation rate, which rose like a soaring eagle to 22.79% in June 2023.

When compared to the previous month, this is an uptick of 0.38% points.

Think about it: in just one year, the headline inflation rate leaped from 18.60% in June 2022 to its current rate.

This is like a runner outpacing their last year’s record by a significant margin.

Why the Surge in Risk-Free Investments?

You might wonder, with such high inflation, why are investors still clamoring for these investments? Especially when they offer a negative real return of -13%.

Well, sometimes, the safety of a sure thing, even with lesser returns, beats the uncertainty of riskier ventures.

A Closer Look: What Every Investor Should Know

  • 182-Day Bill: Investors enthusiastically committed N14.8 billion for this. Yet, the apex bank released just a sliver, N1.3 billion. It’s an oversubscription rate of more than 10x! And the accepted interest rate? A solid 5.9%.
  • 91-Day Bill: Here, investors showed intent with a N13.8 billion bid. In comparison, the central bank offered a meager N4.5 billion. The interest here stands at a cool 5%.
  • Maturity Dates to Remember: Mark your calendars! 9th November 2023 for the 91-Day bill, 8th February 2024 for the 182-Day bill, and yes, 8th August 2024 for the one-year, 364-Day bill.

The overwhelming response to the treasury bills auction paints a clear picture: investors are searching for safe havens amidst the tumultuous financial waters.

As we navigate these times, one thing is certain – the allure of risk-free investments, despite lower returns, remains undiminished.

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FAQs

How much was bid for the one-year treasury bills on 9th August 2023?

Investors bid N808 billion.

How much of the bid amount was allotted?

Only N148 billion was allotted.

What was Nigeria’s inflation rate in June 2023?

It stood at 22.79%.

How much was bid for the 182-day bill and at what interest rate?

N14.8 billion was bid at an interest rate of 5.9%.

When is the maturity date for the 364-Day bill?

It’s set for 8th August 2024.


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