If the result of yesterday’s treasury bill auction is anything to go by, then the Nigerian economy would need more time to recover.
This is because investors are running away to safer assets to prevent total impairment of their investment from the ravaging inflation and volatile business milieu.
At the July 20 treasury bill auction, investors oversubscribed to the various tenors of the auction. For an offer amount of NGN36,7 billion for a 91-Day tenor bill, received about NGN52,0 billion worth of bids. The 182-Day bill offered for NGN39,1 billion received about NGN85,0 billion subscription while the 364-Day instrument offered for NGN52,0 billion received about NGN255,2 billion bids.
However, the Debt Management Office, DMO will only be taking NGN36,7 billion, NGN39,1 billion and NGN129 billion for the 91-Day, 182-Day, 364-Day tenor bills respectively.
The most interesting about this action is that investors were bidding with interest rates higher than the inflation rate. Range of bid rates ranged from 9.5000 – 17.0108, 11.0000 – 18.6108 and 12.0000 – 21.0693 for the 91-Day, 182-Day, 364-Day tenor bills respectively.
If this trend should continue, the equities markets will be starved of long term funds and left in the hands speculators who will push more volatility in the market.
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