CBN Cuts Treasury Bill Rates as Investors Flood Market with N2.7 Trillion Subscriptions
The Central Bank of Nigeria (CBN) reduced stop rates on longer-dated Treasury bills at its 25 March auction, even as investors poured N2.7 trillion into the market for one-year securities. The move leverages a massive liquidity surplus of over N8 trillion in the financial system, allowing the government to lower borrowing costs while maintaining strong investor interest.
Stop rates for the 182-day and 364-day instruments fell by 20 basis points to 16.42 percent and 16.43 percent, respectively, while the 91-day bill remained steady at 15.95 percent. The abundant cash in the banking system has given authorities greater flexibility to manage debt costs by selectively allotting securities and rejecting higher interest bids.
Investor demand was heavily skewed toward longer-term bills, with the 364-day instrument attracting N2.73 trillion in subscriptions for a N200 billion offer. In contrast, the 91-day and 182-day bills were undersubscribed at N98.71 billion and N66.58 billion, respectively, signaling a shift toward locking in higher yields over extended periods. “Market participants continue to position in longer-tenor government securities to secure attractive risk-free returns,” said Ayodeji Ebo, managing director of Optimus by Afrinvest.
Analysts suggest the auction reflects a deliberate government strategy to contain borrowing costs amid N1.98 trillion in maturing debt. Lower allocations to shorter maturities, along with reduced refinancing needs, have eased immediate funding pressures while sustaining demand in the secondary market. Meristem Securities noted that relatively lower allotments at prior auctions have helped maintain participation while pushing yields lower.
The latest results signal a subtle but meaningful shift in Nigeria’s fixed-income market, where strong investor appetite for long-term instruments aligns with cost-conscious borrowing strategies by authorities. With Treasury bill yields trending downward and liquidity remaining abundant, future auctions are expected to see continued demand for longer-dated government securities, setting a positive tone for investors and policymakers alike.
source: Busines day