Central Bank of Nigeria adjusts treasury bill rates as investor demand shifts

DDM News

The Central Bank of Nigeria (CBN) conducted its latest treasury bills auction on February 19, 2025.

Total subscriptions as reported by Diaspora Digital Media (DDM) reached N2.41 trillion across the three available tenors.

Investor interest remained strong but declined from the N3.22 trillion recorded in the February 5, 2025, auction.

The central bank adjusted allotments, especially for the 364-day tenor, while stop rates dropped.

This signaled a shift in investor sentiment and yield expectations.

Demand for short-term treasury bills increased significantly.

The 91-day bills had an offer size of N80 billion and received N62.14 billion in total subscriptions.

This was higher than the N42.37 billion recorded in the previous auction.

The central bank allotted N34.77 billion, while the stop rate declined from 18 percent to 17 percent.

Similarly, the 182-day bills attracted higher subscriptions, rising to N49.88 billion from N19.52 billion.

The central bank allotted N34.98 billion at a lower stop rate of 18 percent, compared to 18.5 percent previously.

Interest in the 364-day bills, traditionally the most sought-after, declined sharply.

Total subscriptions dropped to N2.3 trillion, down from N3.16 trillion in the February 5 auction.

Despite lower demand, the central bank increased allotments for this tenor to N704.38 billion.

The previous allotment for this tenor was N619.36 billion.

The stop rate for the 364-day bills dropped from 20 percent to 18.43 percent.

Bids for the 364-day tenor ranged between 16.5 percent and 25 percent.

This indicates strong competition among institutional investors for long-term government securities.

Declining stop rates suggest investors are willing to accept lower yields.

The maturity dates for the allotted treasury bills vary.

The 91-day bills will mature on May 22, 2025.

The 182-day bills will mature on August 21, 2025.

The 364-day bills will mature on February 19, 2026.

These varying maturities offer investors options for liquidity planning.

The drop in rates aligns with trends in the fixed-income market.

Yields have been moderating due to stable liquidity conditions.

The central bank’s liquidity management may be influencing this trend.

Lower treasury bill rates help reduce government borrowing costs.

Despite lower subscriptions, demand for Nigerian treasury bills remains strong.

The central bank’s actions show continued investor confidence in government securities.

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