Our chart shows the total sales and bid at primary auctions of Nigerian Treasury Bills (NTBs) since the start of the year. The total bid has fallen sharply from the two auctions in February, particularly for the 364-day paper, which has been popular with offshore investors and which attracted a bid of close to N350 billion on both occasions. The Debt Management Office (DMO) latest auction of FGN bonds also saw the lowest total bid (N132bn) since November.
We see a cooling of interest on the part of foreign investors in these numbers. Further evidence would be that sales of foreign exchange (FX) last week at the CBN’s auctions were the highest since August 2012.
Some sizeable dividend remittances were reported. Additionally, we suspect that the cooling of interest reduced the inflows into the interbank market and thereby boosted demand at the auctions. We cannot be more specific since the CBN has not released the bid at its auctions since January 2012.
A cooling of interest does not amount to a rush for the exit. The more active fixed income investors would not readily find a market with greater liquidity than Nigeria’s and offering double-digit yields. Index trackers have bought naira paper for its inclusion in the JP Morgan and similar indices.