Nigerian Treasury Bills Fall To 5.2% Per Annum After CBN Restriction

The Central Bank of Nigeria (CBN) has released a data which shows that the 364-day Treasury Bills (NTB) issued have fallen to 5.2% which is the lowest in almost ten years.

The 182-day bills hit a stop rate of 4.9%, while the 91-day bills stop rate was 3.5% per year.

According to the data, the 364-day bills was offered at N44.8 billion, however investors staked about N105.9 billion.

The increasing demand for NTB is mostly due to lack of investable funds available to Nigerians.

Recall in October 2019, CBN banned individuals and small corporations from buying the NTB, however leaving open to commercial banks and foreign investors.

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This has left hundreds of billions of the Nigerian naira in cash floating as investors have little viable investment options.

It is reported that some businesses have said it will rather invest in the TB despite its low valuation than investing in stock as they allege the risk level is on the high side.

As option, retail investors are interested in buying dollars preferring to earn as low as 4% in the greenback as against holding the naira at 6%.

If yields in the NTB continue to be low most investors could fall prey to Ponzi schemes which typically thrive in an economy with low yield investment.

Similarly, Voice of Nigeria reports that CBN considering the low yield as a temporary situation and may increase rates in other to pick up if the pressure leads to increasing demand for dollar in the economy.

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