The Federal Government of Nigeria, through the Central Bank of Nigeria (CBN), has released the results of its Treasury Bills (T-Bills) auction conducted on February 5, 2025.
The auction, which featured three tenors 91-day, 182-day, and 364-day witnessed a strong investor appetite, particularly for the one-year instrument, which saw subscriptions surpassing N3.1 trillion.
Auction Breakdown and Results
91-Day Treasury Bills
- Offer: N50 billion
- Subscription: N42.37 billion
- Allotment: N31.94 billion
- Range of bids: 17.00% – 22.00%
- Stop rate: 18%
- Maturity date: May 8, 2025
182-Day Treasury Bills
- Offer: N120 billion
- Subscription: N19.52 billion
- Allotment: N18.69 billion
- Range of bids: 17.50% – 22.00%
- Stop rate: 18.5%
- Maturity date: August 7, 2025
364-Day Treasury Bills
- Offer: N500 billion
- Subscription: N3.16 trillion
- Allotment: N619.36 billion
- Range of bids: 19.89% – 24.30%
- Stop rate: 20%
- Maturity date: February 5, 2026
Total subscription is N3,218,032,117,000. The total allotment is N670,000,000,000.
Key Takeaways from the Auction
- Surging Demand for 364-Day Bills: Investors showed overwhelming interest in the one-year instrument, with subscriptions exceeding N3.1 trillion against the N500 billion offered. This reflects the preference for higher-yielding, longer-tenured securities amidst current market conditions.
- Lower Subscription for Shorter Tenors: The 91-day and 182-day bills saw lower-than-offered subscription levels, with the 182-day instrument recording a significant shortfall, attracting just N19.52 billion out of the N120 billion offered.
- Competitive Rates: The stop rates for the three tenors settled at 18%, 18.5%, and 20%, respectively, reflecting the tight liquidity conditions and investor demand for higher returns.
- Government’s Liquidity Management Strategy: The CBN’s allocation of N619.36 billion for the 364-day bills indicates a strategic effort to attract liquidity for government financing while balancing market interest rates.
Market Implications
- The results of this auction suggest that investors are leaning toward longer-tenured instruments to lock in higher yields, given expectations of future monetary policy adjustments.
- With inflation concerns and tight monetary conditions persisting, the demand for risk-free government securities remains robust.
- Additionally, the stop rates indicate that the government is willing to pay a premium to attract investors, particularly for the 364-day bills. This trend could influence future bond yields and impact overall liquidity in the fixed-income market.
- Investors, particularly institutional players, may continue to favor Treasury Bills as a hedge against inflation and a relatively risk-free investment option in Nigeria’s volatile economic landscape.
More insights
The CBN issued N2.2 trillion worth of maturing Nigerian Treasury Bills (NTBs) in the fourth quarter of 2024.
The re-issuance program is part of the government’s ongoing efforts to manage liquidity, sustain the financial market, and maintain economic stability.
