T-bills: Investors groan as interest rates drop further

Investors have registered their displeasure over the consistent decline in the interest rates of Treasury bills.

The T-bills market has seen a consistent decline of interest rates over the past three months.

The rates, which crashed from the double digit region into single digits, is rapidly tending towards zero across all tenors.

The primary market auction, which took place on Wednesday, saw the interest rates drop further to 2.95 per cent, 3.95 per cent and 5.09 per cent on the 91-day, 182-day and 364-day tenors respectively from 3.5 per cent, 4.9 per cent and 5.2 per cent.

The CBN had reported the range of bid rates to be between 2.74 per cent and six per cent for the 91-day tenor, three per cent and six per cent for the 182-day tenor and four per cent and 14.5 per cent for the 364-day tenor.

Despite the decline in interest rates, an oversubscription of N192.19bn (or 85.25 per cent) was recorded as the CBN offered N225.45bn and recorded a total subscription of N417.64bn.

The CBN offered N5.85bn on the 91-day tenor but received subscriptions worth N52.20bn.

On the 182-day tenor, the CBN offered N26.6bn and recorded a total subscription of N87.93bn.

A total of N193bn was offered on the 364-day tenor, which attracted a total subscription of N277.51bn.

The CBN allotted only the amounts offered across all tenors.

An investor, who simply identified himself as Danlami, said the investment in Treasury bills was viable for long-term investors who didn’t mind short-term low returns over a 10, 15 or 20-year time frame.

According to him, going into a panicky movement for a situation that is less than a year is a short-term speculator reaction.

The Senior Manager, Tax and Transfer Pricing, KPMG, Mr Victor Adegite, lamented the low interest rates on the Treasury bills, saying there was no tangible difference between the current interest rates on T-bills and the deposit rate on savings account.

A financial risk and management consultant, Mr Dayo Akinola, said he was keenly watching to see how long the declining interest rate trend would last.

He said, “If I have to make a choice between investing in T-bills at these dismal rates and holding the greenback, I will rather opt for greenback because if inflation is greater than the yield of an investment, it causes value destruction.”

A financial planner, Mr Kalu Aja, said, “Clearly, cash in Nigeria is looking for a new destination to beat inflation.

“I think the CBN is essentially saying if you want inflation-adjusted return, go and seek volatility and take risk.”

The CBN said the T-bills were allotted to investors on Thursday.


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