Nigeria’s Treasury Bills Sees N2.4 trillion In Subscription Amid Lower Rates and Shifting Investor Sentiment

On February 19, 2025, the Central Bank of Nigeria (CBN) conducted its latest treasury bills auction, a critical component of the country’s debt market. This auction attracted total subscriptions of N2.41 trillion across three tenors: 91-day, 182-day, and 364-day bills. This figure represents a notable decline from the N3.22 trillion recorded in the previous auction held on February 5, 2025. Despite the reduced demand, the CBN increased allotments, particularly for the 364-day tenor, while stop rates across all tenors decreased. This shift indicates evolving investor sentiment and has broader implications for Nigeria’s financial markets, reflecting changes in yield expectations.

The auction results highlight a mixed response from investors. Total subscriptions of N2.41 trillion, while substantial, fell short of the previous auction’s N3.22 trillion, suggesting a reduction in overall demand, that may signal shifting market expectations. However, the CBN’s decision to increase allotments, especially for the 364-day bills, from N619.36 billion in the previous auction to N704.38 billion in the current one, indicates an effort to accommodate investor interest while managing liquidity.

Tenor	Previous Subscription (Feb 5, 2025)	Current Subscription (Feb 19, 2025)	Change
91-day	N42.37 billion	N62.14 billion	Increased
182-day	N19.52 billion	N49.88 billion	Increased
364-day	N3.16 trillion	N2.3 trillion	Decreased

 

This table underscores the divergent N704.38 billion in the trends, with short-term securities gaining favor while long-term demand waned.

Tenor-wise Breakdown and Detailed Metrics

To provide a comprehensive view, let’s examine each tenor’s performance in detail:

• 91-day Tenor: The CBN offered N80 billion for this tenor, but subscriptions totaled N62.14 billion, falling short of the offer size. The CBN allotted N34.77 billion at a stop rate of 17%, with bid rates ranging from 16% to 25%. This indicates competitive interest among investors seeking short-term yields, with the maturity date set for May 22, 2025.
• 182-day Tenor: With an offer size of N120 billion, subscriptions reached N49.88 billion, and the CBN allotted N34.98 billion at a stop rate of 18%. Bid rates for this tenor spanned from 17.24% to 22.5%, showing a relatively tighter spread compared to the 91-day tenor. The maturity date is August 21, 2025, offering a medium-term investment horizon.
• 364-day Tenor: This tenor saw the most substantial interest, with an offer size of N500 billion attracting subscriptions of N2.3 trillion, significantly oversubscribing the offer. The CBN allotted N704.38 billion at a stop rate of 18.43%, with bid rates ranging from 16.5% to 25%. This high demand, despite a decline from the previous auction, underscores the attractiveness of long-term government securities, with a maturity date of February 19, 2026.

The following table details the current auction’s tenor-wise metrics:

Tenor	Offer Size	Subscriptions	Allotted	Stop Rate	Bid Range	Maturity Date
91-day	N80 billion	N62.14 billion	N34.77 billion	17%	16% – 25%	22-May-25
182-day	N120 billion	N49.88 billion	N34.98 billion	18%	17.24% – 22.5%	21-Aug-25
364-day	N500 billion	N2.3 trillion	N704.38 billion	18.43%	16.5% – 25%	19-Feb-26

Investor Appetite and Market Dynamics

Investor appetite for short-term government securities remained robust, particularly for the 91-day and 182-day tenors. The sharp rise in subscriptions for these tenors compared to the previous auction reflects a strategic shift towards liquidity-driven investments, possibly driven by macroeconomic uncertainties.

In contrast, the decline in demand for the 364-day tenor, despite the CBN’s increased allotment, suggests investors are weighing inflationary risks, monetary policy directions, and alternative investment opportunities. The notable oversubscription in the 364-day tenor, even at reduced levels, indicates a preference for higher yields to hedge against inflation, highlighting the attractiveness of Nigerian debt instruments

One of the most significant outcomes of the latest auction was the decline in stop rates across all three tenors, signaling a willingness among investors to accept slightly lower yields.

The surge in demand for short-term tenors and the drop in long-term subscriptions highlight shifting investor strategies, possibly driven by economic uncertainties and expectations of a stable interest rate environment.

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