The Central Bank of Nigeria (CBN) on Wednesday raised N215.88 billion from Treasury Bills after it received subscriptions for almost four times the amount of debt initially on offer, traders said.
The bank raised N215.88 billion ($686 million) at the auction, N75 billion more than planned, with the one-year paper accounting for most of the debt. Total subscription at the auction stood at N559 billion naira.
Investors bid as much as 18.9 per cent for the one-year debt and as low as 13.15 per cent for the three months note.
The bank raised N22.78 billion in three month bills at 13.15 per cent, N24.74 billion in six month bills at 16.8 per cent and N168.36 billion in one-year bills at 17 per cent.
Traders said foreign investors sold dollars last week in anticipation of the auction, boosting demand for the bills and also liquidity on the currency market. However currency market liquidity waned on Wednesday as some international investors were waiting to see where they yields would end up, they said. The central bank issues treasury bills twice a month to help the government fund its budget deficit, support commercial lenders in managing liquidity and curb inflation.
The T-bills’ maturities range between three months and a year and would be raised today, according to the CBN. T-bills are marketable short-term money market securities that serve the purpose of raising money for the government and also help in monetary policy management of the CBN.
The CBN issues treasury bills to raise cash to fund the government budget deficit, help manage banking system liquidity and curb rising inflation.
The main investors in government securities are mainly pension funds and commercial banks which control more than 60 per cent of the market, followed by insurance funds and a few micro-finance institutions.