Investors 18% bid for NTB show quest for higher rate after elections

Over ambitious investors are raising their bidding for the Nigerian Treasury Bills (NTB), at higher rates more than the rates the Central Bank could offer, all in anticipation for a higher rate after the general elections.

Investors oversubscribed the short and long term instrument auctioned by the Federal Government through the Central Bank of Nigeria (CBN), this week.

The CBN on Wednesday auctioned a total of N254.64 billion NTB at the primary market and investors bided more at higher rates than the offered rates.

Specifically, investors were bidding as high as 18 percent for long term instruments while the CBN could offer 15 percent.

The summary of the auction result obtained by BusinessDay shows that N7.85 billion was offered for 91 days tenor with allotment/issue date of January 31, 2019. The offer was oversubscribed by N41.04 billion as a range bid of between 10.8500 – 12.0000 percent. However, N28.01 was allotted at a stop rate of 11 percent.

For the 182 days tenor, the CBN offered N 69.56 billion at a stop rate of 13.5 percent. It was oversubscribed by N 68.42 billion at a range bid of between 12.8500 – 14.5000 percent and the allotment was N58.68 billion.

Also, for 364 day tenor with allotment/issue date of January 31, 2019, the CBN offered N177.22 billion, which was also oversubscribed by N214.38 billion at a range bid of between 14.3000 – 18.0000 percent. However, the allotment was N167.93 billion, at a stop rate of 15 percent, which was below the offered amount.

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Ayodeji Ebo, managing director, Afrinvest Securities limited said the reason for the under allotment may be attributed to investors demand for higher rates.

Based on the data, he explained that the 364-day tenor was over-subscribed (bid-cover ratio of 1.2x) however, the CBN was not willing to go above the 15.0 percent stop rate. From the range of bid rates, we observed investors bid as high as 18 percent.

“Investors are still optimistic that the interest rate may still move up before the general elections especially the OMO stop rate”, Ebo said in an emailed response to BusinessDay.

The general elections are scheduled for February 16, 2019 and may likely usher in stability and smooth transition or disruption, either of which will impact the economy and businesses.

Hope Moses-Ashike

Hope Moses-Ashike is an Associate Editor, Banking and Finance, with more than a decade of experience reporting on Nigeria’s financial system and broader economy. She closely tracks market movements, monetary policy decisions, company disclosures, regulatory actions, economic indicators, and global developments, and interprets what they mean for businesses, investors, policymakers, and households. Her reporting helps readers understand complex issues such as inflation trends, foreign exchange market dynamics, interest rate decisions, bank performance, and investment risks. She also covers major international events and periodically travels to Washington, D.C., to report on the World Bank/IMF Spring and Annual Meetings. Her dedication to financial journalism has earned her multiple recognitions and invitations to high-level professional development programmes. She is an alumna of the International Visitors Leadership Programme (IVLP) in the United States and holds an Advanced Financial Journalism Certificate from the Press Association Training in London, UK. Her other notable achievements include completing the Lagos Business School CMC Programme, the Bloomberg Media Africa Initiative Programme, and a Master Class in Journalism at Rhodes University in South Africa.