Investors Flood 364-Day Treasury Bills with N1.05 Trillion Amid Marginal Rate Cut

The Nigerian Treasury Bills (NTB) auction held on May 21, 2025, witnessed overwhelming demand from investors, particularly for the 364-day tenor, which attracted a staggering N1.05 trillion in subscriptions—three times the N350 billion initially offered.

Strong Investor Appetite Across All Tenors

The Central Bank of Nigeria (CBN) conducted the auction, recording total subscriptions of N1.17 trillion across 91-day, 182-day, and 364-day instruments, significantly surpassing the total offer of N500 billion. Despite the high demand, the CBN maintained a relatively tight stance on rates.

The apex bank kept the stop rates for 91-day and 182-day papers unchanged at 18.00% and 20.00%, respectively, while slightly reducing the 364-day stop rate by 7 basis points from 19.63% to 19.56%. This marginal adjustment suggests the CBN is attempting to balance government borrowing costs with investor demand for fixed-income securities.

364-Day Instrument Dominates Market Interest

The 364-day bill accounted for nearly 90% of total subscriptions, with investors staking over N1.05 trillion in bids for the long-tenured paper. The CBN responded by increasing the allotment to N503 billion, up from the initial N350 billion offer.

Key Auction Highlights:

• 91-day bill: Attracted N72.56 billion in subscriptions against a N50 billion offer, with N71.67 billion allotted
• 182-day bill: Received N46.84 billion in bids versus a N100 billion offer, with N41.13 billion allotted
• True yields: 364-day (24.31%), 182-day (20.40%), and 91-day (18.86%) remained attractive amid Nigeria’s high inflation environment

Market Context and Investor Strategy

The strong demand follows the CBN’s recent Monetary Policy Committee (MPC) meeting, where members unanimously voted to maintain the Monetary Policy Rate (MPR) at 27.50%. This marks the second consecutive hold decision in 2025 after six successive hikes in 2024.

Investors appear to be strategically locking in high yields on longer-term instruments ahead of potential rate cuts later in the year. The auction results demonstrate continued confidence in government securities, particularly from institutional investors and pension fund managers.

With inflation remaining above 23%, these treasury bills offer investors an opportunity to preserve capital while earning attractive returns in Nigeria’s challenging economic environment.

Full credit to the original publisher: Nairametrics