Foreign Investors Outnumber Domestic Players in Bids for OMO and Treasury Bills, Accounting for 75% of Total Bids

The Central Bank of Nigeria (CBN) has disclosed that over 75% of bids received during the auctions of government securities held on March 1 and 6, 2024, were from foreign investors, showcasing their growing interest in Nigeria’s financial instruments.

CBN previously carried out Open Market Operations (OMO) auctions, successfully selling N1.06 trillion in bills.

Following this, the apex bank conducted another round of Treasury Bills (T-Bills) auction on March 6, 2024, where it offloaded about N1.32 trillion.

These auctions not only signify a robust demand for Nigerian debt but also highlight the increasing confidence of foreign investors in the Nigerian economy.

According to a statement from the apex bank on Thursday, there is an increased investor interest in short-term sovereign debt.

The statement noted: “Higher FX inflows continued in March 2024, driven by increased investor interest in short-term sovereign debt following the recent adjustment to benchmark interest rates. She noted that Government securities issuances had been significantly oversubscribed, with foreign investors accounting for over 75% of bids received at the auctions conducted on March 1 and 6, 2024.”

The CBN also reported a significant rise in foreign inflows in February 2024, driven by higher remittance payments from Nigerians living abroad and a spike in the purchase of naira assets by foreign portfolio investors.

Mrs. Hakama Sidi Ali, the Bank’s Acting Director of Corporate Communications, disclosed in a press briefing in Abuja that overseas remittances reached $1.3 billion in February, a substantial increase from $300 million in January.

Furthermore, foreign investors purchased over $1 billion of Nigerian assets last month, with the total portfolio flows for the early part of 2024 reaching at least $2.3 billion, compared to the $3.9 billion recorded for the entirety of last year.

The surge in foreign exchange inflows has continued into March 2024, attributed to the recent adjustments in benchmark interest rates which have heightened investor interest in short-term sovereign debt.

“The Bank’s data indicates that overseas remittances rose to US$1.3 billion in February 2024, more than four times the US$300 million received in January.

“Foreign investors purchased more than US$1 billion of Nigerian assets last month, with total portfolio flows of at least US$2.3 billion recorded thus far in 2024 compared to US$ 3.9 billion seen in total for last year.”

The increase in foreign participation in Nigeria’s debt market aligns with the CBN Governor, Mr. Olayemi Cardoso’s strategic objectives to curb inflation, stabilise the exchange rate, and boost confidence in the banking system and overall economy.

Utilising a detailed plan outlined during last month’s Monetary Policy Committee (MPC) meeting and a conference call with foreign portfolio investors, Governor Cardoso aims to sustain increases in Nigeria’s foreign currency reserves and enhance liquidity in the foreign exchange market.

The CBN plans to sell N1.64 trillion in Nigeria Treasury Bills in the second quarter of 2024 between March and May. The new offer is a refinancing of existing maturing treasury bills of different tenures.   According to the bill issue programme, the apex bank will be refinancing its 91-day, 182-day, and 364-day treasury bills that mature during the period.