The Central bank of Nigeria says long term government securities are attracting more investors than short term ones. The bank in its second quarter economic report noted a strong preference for longer tenure government instruments among investors as a way of hedging the soaring inflation numbers.
The investors’ preference for long term securities is in line with the CBN’s monetary policy which includes a higher interest rate to tame inflation. With the high interest rate, the CBN maintains a higher yield on government securities thereby drawing investors towards them.
Also, with a higher interest rate, the long tenured securities offer a more predictable return while providing the investors with the right buffer against inflation. In addition, it served as a major factor in helping to stabilise the country’s financial sector.
The increased investor participation in government bonds and Treasury bills could play a key role in bolstering investor confidence and ensuring fiscal stability.
- Advertisement -
Nigeria had raised N289.597 billion from its October 2024 bond, a testament to how the growing confidence in government securities in the country.
During the period, the minimum accepted yield in treasury auctions increased significantly across all tenors, with the average rate reaching 18.47%, up from 11.97% in the first quarter. Also, the government offered N1.35 trillion in bonds, and investors’ subscriptions exceeded this amount, reaching N1.78 trillion.
