CBN Cuts Treasury Bill Rates as Investors Pour N2.7 Trillion into One-Year Securities
The Central Bank of Nigeria (CBN) has lowered interest rates on longer-term Treasury bills following a surge in investor demand, with over N2.7 trillion poured into one-year securities at its March 25 auction. The move comes as excess liquidity in the financial system—estimated at over N8 trillion—gives the apex bank room to reduce borrowing costs while still attracting strong participation from investors.
At the auction, stop rates on the 182-day and 364-day Treasury bills dropped slightly by 20 basis points to 16.42 percent and 16.43 percent, respectively, while the 91-day bill remained unchanged at 15.95 percent. The modest decline reflects easing pressure on yields, driven largely by abundant cash in the banking system and the government’s ability to reject higher bids.
Despite offering a total of N400 billion across three tenors, demand was far from evenly distributed. Investors showed a clear preference for longer-term instruments, with the 364-day bill attracting a massive N2.73 trillion in subscriptions for just N200 billion on offer. In contrast, the 91-day and 182-day bills recorded weaker interest, falling short of their subscription targets.
Market analysts say this trend highlights a strategic shift among investors, who are increasingly locking in higher yields on longer-dated securities. The one-year bill, offering returns around 19.66 percent, remains particularly attractive to institutional investors seeking stable, risk-free returns. According to Afrinvest’s Ayodeji Ebo, strong demand at the long end of the market signals improved liquidity conditions and sustained confidence in government instruments.
The outcome of the auction also points to a deliberate effort by authorities to manage borrowing costs more efficiently. With reduced refinancing pressure and strong liquidity expected to persist, the government appears better positioned to guide rates downward without losing investor interest. Analysts believe this dynamic could shape Treasury bill yields in the coming months, as investors continue to adjust their strategies in response to evolving market conditions.
source: Business day