One-Year T-Bill Yields Edge Up to 19.76% as DMO, Investors Wrestle Over Rates
In a shift from recent trends, the yield on Nigeria’s one-year treasury bills rose to 19.76% at the latest primary market auction held on Wednesday, August 7, 2025. This marks a reversal after five consecutive auctions of declining rates, where the yield had fallen from a high of 29% earlier in the year. The change underscores a growing tension between the Debt Management Office (DMO) and market participants, each seeking a “comfortable” yield level amid shifting market dynamics.
According to Olaolu Boboye, head of research at CardinalStone, the uptick stems from a push-and-pull between the DMO, which aims to minimize borrowing costs, and investors, who demand returns that better reflect inflation and market risks. Boboye added that one-year T-bill yields are expected to hover around 19% through year-end, while bond yields could settle between 15-16%, depending on liquidity trends and inflation expectations.
Shorter-dated bills saw no such increase. The 91-day and 182-day T-bills held steady at 15.59% and 16.80%, respectively, despite tight liquidity conditions in the financial system. Analysts at Meristem had already anticipated a mild uptick across maturities, citing liquidity mop-ups following Tuesday’s Open Market Operation (OMO) and investors’ hesitancy to accept primary auction rates below those available in the secondary market.
At the auction, the CBN offered N220 billion across the three standard tenors: N60 billion in 91-day bills, N20 billion in 182-day bills, and N140 billion in 364-day bills. However, only N173.24 billion was eventually allotted, with the 365-day paper accounting for 80% of total subscriptions and sales. The short-term 91-day bill attracted the lowest demand, seeing just N18.3 billion in sales against N20.87 billion in subscriptions.
The recent rise in yields could serve as a signal for policymakers, especially as the broader decline in rates and easing inflation may point to a possible rate cut later this year. Investors and analysts alike are closely watching the balance between government borrowing needs and market appetite, as these will shape monetary policy and capital market flows in the second half of 2025.
Source: business day