Foreign investors bought N557 billion worth of treasury bills (TBs) in 2016 against N571.59 billion they invested in treasury bills in 2015. According to the National Bureau of Statistics (NBS), foreign portfolio investment in treasury bills in 2016 remained relatively stable when compared to foreign portfolio investment in equities and bonds in 2016.
The NBS reported that foreign portfolio investment in equities and bonds dropped respectively by 442 per cent and 49 percent between 2015 and 2016. Investment in equities dropped to N859 billion in 2016 from N4.66 trillion in 2015, while investments in bonds dropped to N395.9 billion from N776.28 billion in 2015.
The stability of foreign portfolio investment in treasury bills was attributed to high interest rate prevalent in the market. The Central Bank of Nigeria (CBN) has never hidden its desire to use high interest rate to attract foreign investors into the nation’s economy by retaining its Monetary Policy Rate (MPR) at 14 percent.
Mr Godwin Emefiele, governor, CBN, said that a rate cut would increase inflationary pressure and make the economy unattractive for foreign and domestic investment. This seems to be working. Investors demanded for N994 billion as against N332.4 billion TBs offered by the CBN last week
Review of treasury bills trading show that the CBN sold N694 billion, comprising N302.4 billion worth of primary market bills and N391.6 billion worth of secondary market bills at average interest rate of 17.24 per cent. At the primary market, where fresh bills are sold, the CBN offered 45.18 billion worth of 91 days bills, total public subscription stood at N69.4 billion while the apex bank sold N45.2 billion at interest rate of 13.79 per cent. Total public subscription to the N80 billion worth 182 days bills stood at N85.4 billion, while the apex bank sold N80 billion at 17.25 percent. Total public subscription to the N117.2 billion worth of 364 days bills on offer stood at N447.34 billion while the apex bank sold N302.4 billion at 18.54 percent. At the secondary market where existing bills are resold (Open Market Operations, OMO), the CBN offered N30 billion worth of 181 days bills, total public subscription stood at N82.6 billion while the apex bank sold N82.6 billion at 18 percent. The apex bank also offered N60 billion worth of 342 days bills, with total public subscription at N309 billion while the amount sold was N309 billion at 18.6 per cent.