The Central Bank of Nigeria (CBN) has successfully raised a total of N284.26 billion through its latest Nigerian Treasury Bills (T-Bills) auction.

The auction, which was initially set to offer N228.72 billion, saw an overwhelming subscription of N773.98 billion, indicating an oversubscription rate of 338%.

This substantial interest highlights the ongoing demand for government securities amid Nigeria’s economic conditions, providing a crucial source of funding for the government’s short-term expenditure.

According to the auction results released by the Debt Management Office (DMO) and confirmed by data on the CBN website, the strong investor turnout underscores the perceived safety and attractiveness of T-Bills as an investment option.

Surge in Treasury Bill Debt

The successful auction comes at a time when Nigeria’s T-Bills debts have soared to unprecedented levels.

Between December 2023 and March 2024, the debt rose sharply from N6.5 trillion to N10.4 trillion, marking a 60% increase in just three months.

This rise reflects the government’s heavy reliance on T-Bills to finance short-term fiscal needs amid ongoing economic challenges.

Breakdown of the Auction

The auction featured three tenors: 91-day, 182-day, and 364-day bills. Each tenor saw significant investor interest, with the 364-day bills attracting the highest subscriptions:

• 91-day bills: Offered at N29.83 billion, received subscriptions worth N36.29 billion, with an allotment of N28.15 billion. The stop rate was 16.30%.
• 182-day bills: Offered at N30.67 billion, received subscriptions of N40.58 billion, with an allotment of N36.44 billion. The stop rate was 17.44%.
• 364-day bills: Offered at N168.21 billion, received overwhelming subscriptions of N697.11 billion, with an allotment of N219.67 billion. The stop rate was 20.68%.

Investor Confidence and Government Strategy

The significant oversubscription across all tenors highlights strong investor confidence in Nigerian T-Bills as a secure investment avenue, even amidst prevailing economic uncertainties.

The high subscription rate, particularly for the 364-day bills, indicates a preference for longer-term securities, likely driven by expectations of future economic stability and favorable returns.

Government’s Debt Management

This auction underscores the critical role of T-Bills in the government’s debt management strategy.

Treasury bills and Federal Government of Nigeria (FGN) bonds are considered risk-free investments, providing a safe haven for investors while helping the government manage its debt profile and finance short-term expenditures.

Rising Domestic Debt

The surge in T-Bills debt has contributed to an increase in Nigeria’s total domestic debt profile, which rose to N65.6 trillion in Q1 2024, up from N59.1 trillion in December 2023.

While the external debt profile saw a slight dip from $42.9 billion to $42.1 billion, the overall public debt in naira terms stood at N114.7 trillion as of March 2024.

Economic Outlook

Despite the rising debt levels, experts highlight the importance of these instruments in managing liquidity and supporting government financing needs.

Treasury bills not only help in raising funds but also play a role in controlling the money supply, which is crucial for implementing effective monetary policy.

It has been uncovered that Nigerian politicians, security officials, and their families have collectively invested close to N1.49 trillion in the Dubai property market over the past two decades.

This massive investment spree spans 1,600 properties located in some of Dubai’s most exclusive and sought-after neighborhoods.

The investigation, named ‘Dubai Unlocked,’ conducted over six months by the Organized Crime and Corruption Reporting Project (OCCRP) in collaboration with Economy Post and other international media partners, has shed light on the extent of Nigerian elites’ financial footprint in the UAE’s commercial capital.

The investigation outlined the property holdings of these individuals, revealing an estimated total value approaching $1 billion.

As of 2020, Nigerian politically exposed persons (PEPs) and their associates owned around 800 properties valued at $400 million.

However, recent findings indicate a significant surge, with the number of properties doubling and their collective value nearing the N1.49 trillion mark.

The vast majority of these properties, amounting to 88%, are reportedly owned by individuals with ties to Nigeria’s government and security apparatus.

Prominent figures implicated in this expansive real estate portfolio include former Vice President Atiku Abubakar, whose family owns multiple high-end apartments and villas across prestigious locations such as Palm Jumeirah and Burj Khalifa.

Similarly, other former governors, senators, and high-ranking civil servants have been linked to luxury residences in Dubai, raising questions about the source of funds used for these acquisitions.

Critics argue that while there may be legitimate reasons for acquiring property abroad, such vast investments raise concerns about capital flight and the origins of the funds involved.

Emmanuel Okeke, a legal expert, highlighted the distinction between lawful investments and potential financial misconduct, emphasizing the need for transparency and accountability in wealth acquisition by public officials.

The Dubai property market, renowned for its growth and stability, continues to attract global investors, with residential property prices rising by over 20% in the first quarter of 2024 alone.

Despite international scrutiny and calls for regulatory reforms to curb illicit financial flows, Dubai remains a favored destination for wealthy individuals seeking to diversify their assets.

Authorities in Nigeria and international organizations such as C4ADS have underscored the importance of ensuring that investments in foreign real estate are conducted ethically and in compliance with anti-money laundering regulations.

The spotlight on Nigerian VIPs’ extensive property holdings in Dubai serves as a stark reminder of the challenges posed by globalized financial activities and the imperative to safeguard against corruption and illicit wealth accumulation.

Nvidia Corp., the renowned chipmaker, defies sales projections driven by an unprecedented boom in artificial intelligence (AI).

This surge has propelled Nvidia to become the most expensive stock in the S&P 500 Index, with shares trading at roughly 23 times the company’s projected sales over the next 12 months.

For more than a year, Nvidia has experienced a meteoric rise in demand for its chips, fueled by the frenzy surrounding AI advancements.

This demand has rendered traditional financial estimates obsolete, leaving even Nvidia’s executives struggling to accurately predict the company’s future revenue.

Since the chipmaker’s sales began skyrocketing in the fiscal quarter ending April 2023, revenue has consistently exceeded company forecasts by an average of 13%, a figure more than double the average over the past decade.

The most notable instance occurred in August, when Nvidia’s sales surpassed its projections by an astounding 23%, marking the biggest beat since at least 2013.

A representative for Nvidia declined to comment on the company’s revenue projections and the challenges in forecasting amidst the AI boom.

The challenge of modeling Nvidia’s future earnings lies largely in the unpredictability of supply amid surging demand.

Brian Colello, an analyst at Morningstar, highlighted this issue, noting that Nvidia’s situation is unique.

“Assuming steady improvement in Nvidia’s ability to increase supply, I add up to $4 billion to Nvidia’s quarterly revenue to ballpark the upcoming quarter’s sales,” Colello explained.

He recently raised his price target for Nvidia shares to $105 from $91, though they are currently trading around $127.

Colello is not alone in his optimistic adjustments. Ben Reitzes, an analyst at Melius, has raised his price target on Nvidia five times this year, most recently to $160, implying a 26% gain from recent closing prices.

The market’s enthusiasm is evident as Nvidia’s stock has surged 156% this year, briefly overtaking Microsoft Corp. to become the world’s most valuable company at $3.34 trillion.

This rally has contributed to a record $8.7 billion inflow into tech funds last week, according to Bank of America Corp.’s analysis of EPFR Global data.

However, Nvidia shares have since fallen 6.7%, erasing over $200 billion in market value.

For investors relying on discounted cash flow models, the gap between estimates and actual results has created a conundrum.

In the past five quarters, analyst estimates for Nvidia’s sales have deviated from actual results by an average of 12%, the third-highest among S&P 500 companies with average quarterly revenues exceeding $5 billion.

Despite the challenges in forecasting, Nvidia’s growth remains impressive. The company is projected to deliver a profit of $14.7 billion on sales of $28.4 billion in the current quarter, reflecting increases of 137% and 111%, respectively, from the same period a year ago.

Comparatively, Microsoft’s sales are expected to rise 15%, with Apple’s projections sitting around 3%.

While Nvidia’s valuation multiples are high, they appear more reasonable considering the company’s growth trajectory.

However, Michael O’Rourke, chief market strategist at Jonestrading, cautions that the extent of Nvidia’s outperformance may diminish due to its sheer size, potentially making it harder to justify the current stock price.

“That’s where the risk comes in,” O’Rourke said. “You’re paying a high price for a large market cap company where the beats have been trending lower, and that’s likely to continue.”

As Nvidia continues to navigate the unpredictable waters of the AI surge, investors and analysts alike are left grappling with the challenge of accurately predicting the company’s future in an era of unprecedented technological advancement.