Nigeria sells Treasury Bills above prevailing rates to attract foreign investments

In its bid to attract more foreign investments and meet its projected 30 per cent increase in dollar supply in the forex market, the Central Bank of Nigeria (CBN) on Friday offered three tranches of Treasury Bills, N145.96 billion naira of the 12-month bill, N26.60 billion of six-month paper and N32.40 billion of three-month paper.

The bills were offered at 17.39 per cent for the six-month bill and 18.54 per cent for the one-year paper, compared to the earlier issuance of 17.1 per cent and 18.3 per cent respectively.

The bank’s three-month bill which fetched 13.42 per cent was not expected to be fully subscribed.

Offering the bills above the prevailing rate was a move described by close watchers of the sector as the most impressive means of having more foreign investors come into the system.

A CBN official, who pleaded for anonymity, said the current bills will not only make scarce dollar more available, but will be a means of sustaining the goodwill that Nigeria is currently enjoying since the signs that the country was exiting recession became more apparent.

“CBN is targeting more of foreign investors than their local counterparts, hence the anticipated outpouring of the yield, which will rub off on the foreign market.

“The apex bank intends to use the yields to sustain its planned 30 per cent increase in its input on Forex aimed at enhancing recession exit.

“The fact that naira is improving at the foreign exchange market is a proof that enough dollars are now being realised from the multi-faceted Treasury Bill transactions,” said the source.

Read also: Since CBN sells dollar to businesses at N200, Pilgrims deserve same, Saraki offers

The Friday sale was coming on the heels of Wednesday Treasury Bill sales which went for 17.1 per cent for the six-month bill and 18.3 per cent for the one-year bills respectively.

But buyers were said to be cautious of what Nigeria’s monetary policy body might be coming up with as speculations are rife that the meeting of the MPC might likely lead to a reduced interest rate.

Explaining the rationale behind frequency at the capital market since 2016, the CBN spokesman, Isaac Okoroafor, said there was nothing extraordinary about that, but declined going further.

But experts say the failure of the country to secure loan facilities from international lenders for its 2016 and 2017 budgets made the sale of financial instruments the only available means of sustaining the economy.

They say this has seen both the CBN and DMO run to the market more often than was recorded in the past five years.

 

 

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