Investors shun 182-day T-Bills, flock to 364-day bills with N677 billion subscriptions 

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The latest Nigerian Treasury Bills (NTBs) auction held on June 5, 2024, unveiled a significant trend as investors leaned heavily towards the longer-term 364-day bills while showing reluctance for the shorter-term 182-day bills. 

The auction raised a total of N278.4 billion in allotments, highlighting a pronounced divergence in investor preferences based on yield expectations and economic outlook. 


Investors seek higher yields in 364-day bills 

In the 364-day tenor, the government offered N179.89 billion, but the investor appetite significantly surpassed this amount, with total subscriptions reaching an astounding N677.42 billion. 

This overwhelming interest led to an allotment of N246.54 billion at a stop rate of 20.67%. The bid range for this tenor was between 16.4% and 25.0%, reflecting a strong demand for higher returns over a longer investment period. 

The high subscription level for the 364-day bills affirms a prevailing sentiment among investors seeking to secure their funds in longer-term investments that offer higher yields. 

This shift can be attributed to expectations of stable or possibly increasing interest rates in the near future. Investors are evidently looking to maximize returns in an environment where the outlook for short-term gains is less favourable. 


Low Interest in 182-day bills 

In stark contrast to the 364-day bills, the 182-day bills received a lukewarm response from investors. The government had put forward an offer of N26.82 billion, but subscriptions only reached N15.02 billion, indicating a significant shortfall in demand. 

The final allotment was N12.27 billion at a stop rate of 17.5%, with bid rates ranging from 16.5% to 25.0%. 

The relatively low interest in the 182-day bills suggests that investors are hesitant to lock in their funds for six months when the return does not adequately compensate for the opportunity cost compared to the higher yields available in the longer-term 364-day bills.  


Moderate activity in 91-day bills 

The 91-day tenor, while less dramatic, also experienced considerable interest from investors. The government offered N14.42 billion, and subscriptions totalled N21.44 billion, showcasing a healthy demand for short-term securities. 

The allotment was N19.61 billion at a stop rate of 16.5%, with bids ranging between 15.25% and 18.00%. 

The steady interest in 91-day bills indicates that while there is a preference for higher yields, there remains a segment of investors who prioritize liquidity and shorter investment horizons. 


More Insights 

  • The clear preference for the 364-day bills indicates that investors are keen on maximizing their returns in a high-yield environment, reflecting expectations of stable or increasing interest rates over the coming year. 
  • The substantial subscriptions for the longer-term bills suggest a confidence in the government’s fiscal strategies and a belief in the stability of the economic outlook. 
  • The tepid response to the 182-day bills underscores the market’s demand for better returns, even at the cost of longer-term commitments. 
  • Investors are evidently weighing their options carefully, favouring instruments that offer higher yields over shorter durations with comparatively lower returns. 
  • However, Nairametrics observed that the subscription rate for the 364-day bill is lower compared to the previous auction that recorded about N1.43 trillion in subscriptions on the same bill. 




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