In a bid to manage surplus liquidity in the banking sector, the Central Bank of Nigeria (CBN) has achieved a significant milestone by generating N7.7 trillion through Nigerian Treasury Bills (NTBs) and Open Market Operations (OMO) in the first quarter of 2024. This marks a remarkable surge of 383% compared to the N1.59 billion acquired in the same period of 2023.
A detailed breakdown reveals that in Q1 2024, the CBN sold NTBs worth N5.6 trillion, a substantial increase from the N1.59 trillion sold in Q1 2023. Furthermore, the total OMO sales in Q1 2024 amounted to N2.06 trillion, compared to no OMO sales in the corresponding period of the previous year.
The NTBs attracted significant interest from both foreign and local investors, with total subscriptions amounting to N21.1 trillion against an offering of N2.21 trillion.
Notably, there has been a notable increase in stop rates on NTBs from the initial auction in January to the final auction in March 2024. Rates climbed from 2.44% to 16.24% for a 91-day tenor bill, from 4.22% to 17% for a 182-day tenor bill, and from 8.3995% to 21.124% for a 364-day tenor bill.
Commenting on the developments, Mr. David Adnori, Vice President of Highcap Securities Limited, emphasized the attractiveness of NTBs as a secure investment option backed by the government.
“As the rate on NTBs increases, it becomes more attractive to investors seeking a risk-free investment. The CBN’s strategy of offering attractive interest rates has proven effective, with investors showing confidence in the government and its reforms. The significant oversubscription indicates substantial system liquidity,” Mr. Adnori remarked.
The surge in NTB sales underscores the confidence of investors in the government’s policies and initiatives, reflecting positively on Nigeria’s economic landscape.
