CBN Sells N7.9 Trillion in Treasury Bills, Rejects N12.2 Trillion in Bids Amid Surging Investor Demand
In a move reflecting rising investor appetite for naira-denominated assets amid persistent inflation, the Central Bank of Nigeria (CBN) sold N7.9 trillion worth of Treasury Bills (T-Bills) between January and May 2025. This represents just 39.2% of the N20.13 trillion subscribed across 12 primary market auctions, leaving a staggering N12.24 trillion in bids rejected. The strong demand suggests investors are increasingly turning to T-Bills as a hedge against Nigeria’s double-digit inflation.
The CBN, through the Debt Management Office (DMO), initially offered only N6.02 trillion during the auctions, but raised significantly more as it responded to market demand and pursued macroeconomic stability. T-Bills, being short-term, risk-free instruments, remain an attractive vehicle for both institutional and individual investors seeking secure returns in uncertain times.
To further attract investments and manage inflation, the CBN raised interest rates across various T-Bill tenors. For example, the stop rate on the 91-day bills rose from 16.5% in May 2024 to 18.5% in May 2025, and the 364-day bill saw a slight drop to 19.5% from 20.69% year-on-year. These rate adjustments are part of the apex bank’s monetary tightening strategy aimed at stabilising the naira and curbing inflation.
The variation in stop rates across different maturities reflects investor sentiment on Nigeria’s economic outlook. While shorter-term bills suggest optimism for rate stability, the higher yields on longer-tenor bills indicate investor caution about future volatility. The market has shown particularly strong demand for long-term T-Bills, with stop rates hitting 20.32% in early February 2025.
Experts and analysts believe the CBN’s current path is appropriate for encouraging foreign capital inflows and improving dollar liquidity. Analysts at Cordros Research project a gradual decline in T-Bill yields towards the end of 2025 as inflation moderates and rate hikes pause. Meanwhile, investment banker Tajudeen Olayinka supports the current high-yield strategy, suggesting it could help bring exchange rate stability and temper speculative behavior in the equity markets.
Source: This Day