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CBN secures N1.47 trillion in subs for 364-day Treasury Payments @22.6% cease charge 

The Central Bank of Nigeria (CBN), on behalf of the Debt Administration Workplace (DMO), has revealed a 283.42% oversubscription price N1.47 trillion for the 364-day Treasury Payments on the public sale on January 8, 2025.

On January 6, the CBN introduced plans to challenge Treasury Payments with tenors of 91, 182, and 364 days, set for public sale on January 8, 2025.

They provided N50 billion for the 91-day payments, N80 billion for the 182-day payments, and N385 billion for the 364-day payments.

In mild of this, the subscription outcomes revealed N22.94 billion for the 91-day payments, N20.81 billion for the 182-day payments, and a staggering N1.47 trillion for the 364-day payments. 

Bids ranged from 17-28% for the 91-day invoice (stop-out charge: 18%), 18-20% for the 182-day invoice (stop-out charge: 18.5%), and 22-28% for the 364-day invoice (stop-out charge: 22.62%). 

Earlier than the public sale, it was introduced that traders might purchase every bond unit for N1,000, with a minimal subscription of N5,000 in increments of N1,000, as much as a most of N50 million.

Maturity dates for the Treasury Payments have been set as follows: April 10, 2025, for the 91-day payments, July 10, 2025, for the 182-day payments, and January 8, 2026, for the 364-day payments. 

The allotment date for all three Treasury Payments is January 9, 2024, with allocations of N21.30 billion for the 91-day payments, N20.48 billion for the 182-day payments, and N473.20 billion for the 364-day payments.

Surge in T-Invoice demand amid rising rates of interest 

On January 10, 2024, the Central Bank of Nigeria raised N149.4 billion by Treasury Payments. The 91-day payments accounted for N2.78 billion, the 182-day payments for N94.33 billion, and the 364-day payments for N52.29 billion.

  • A comparability of subscription ranges exhibits a big surge in demand for the 364-day payments, with curiosity rising by 2,723 p.c to N1.4 trillion.
  • Curiosity within the 91-day payments additionally elevated by 725.4 p.c to N22.9 billion.
  • Nonetheless, curiosity within the 182-day payments declined sharply by 77.9 p.c to N20.8 billion.

This heightened curiosity in longer-term securities is occurring towards the backdrop of rising rates of interest.

In November, the Central Bank of Nigeria raised its Financial Coverage Fee by 25 foundation factors from 27.25 p.c to 27.50 p.c as a part of efforts to fight inflation, which stood at 33.88 p.c within the month.

Previous to that, the Financial Coverage Committee applied six consecutive rate of interest hikes to handle inflationary pressures and stabilize the economic system.

This has pushed traders towards high-yield authorities devices like Treasury Payments as a hedge towards inflation.

What to know 

  • Treasury Payments (T-bills) don’t pay curiosity within the conventional sense like bonds. As an alternative, they’re offered at a reduction to their face worth, permitting traders to earn returns upon maturity.
  • The worth of T-bills is intently tied to rates of interest. When charges rise, the costs of present T-bills sometimes fall, making newer T-bills with increased charges extra enticing attributable to their higher yields.
  • Modifications in investor demand for T-bills mirror the best way shopper preferences shift with tendencies, as rate of interest dynamics form funding selections.

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