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FG Raises N284.26bn In Treasury Bills Auction Amid Rising Debt Levels

Published

6 months ago

Jun 28, 2024.

The Federal Government raised N284.26 billion in its latest Treasury Bills auction amidst escalating debt levels, reflecting strong investor demand for safe-haven investments amid economic uncertainties.

EKO HOT BLOG reports that The Federal Government, through the Central Bank of Nigeria (CBN), has successfully raised N284.26 billion in its latest Nigerian Treasury Bills auction, highlighting robust investor interest despite soaring debt levels which reached N10.4 trillion between December 2023 and March 2024.

According to the Debt Management Office (DMO), the auction results, corroborated by data on the CBN website, revealed an overwhelming subscription of N773.98 billion, far exceeding the N228.72 billion offered.

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This surge in demand underscores persistent investor confidence in government securities amid prevailing economic uncertainties.

The auction’s outcome indicates a strategic move by the government to secure short-term financing to meet immediate fiscal obligations. This funding is crucial amidst ongoing efforts to manage the country’s economic challenges effectively.

In recent months, the Federal Government has relied on Treasury Bills and other debt instruments to raise funds, as evidenced by the substantial oversubscription seen in this auction.

This strategy aims to provide a stable source of financing while managing liquidity in the financial system.

N284.26bn Treasury Bills Auction

The significant investor interest in Nigerian Treasury Bills reflects their perceived safety and attractiveness amidst uncertain economic conditions.

Investors continue to view these instruments as viable options for preserving capital and achieving moderate returns.

Meanwhile, the government’s increasing reliance on domestic borrowing, evident in the rise of T-Bills debts from N2.8 trillion in December 2023 to N10.4 trillion currently, underscores the urgency to manage debt sustainability. Despite the high demand for government securities, concerns persist over the rising cost of servicing domestic debts, particularly Treasury Bills with yields approaching 30% per annum.

Looking ahead, analysts suggest that effective debt management strategies will be crucial for maintaining investor confidence and sustaining economic stability.