The Central Bank of Nigeria (CBN) conducted an Open Market Operations (OMO) auction on March 6, 2025, attracting N1.88 trillion in total subscriptions—more than three times the N600 billion initially offered.
Despite the strong demand, stop rates on the 355-day and 362-day bills declined again, signaling a shift in the fixed-income market as the CBN moderated yields.
The latest auction saw the stop rate for the 355-day bill drop to 19.19% from 21.32% in the previous auction, representing a 2.13 percentage point decline. Similarly, the 362-day bill cleared at 19.45%, down from 21.35%, reflecting a 1.90 percentage point decline.
Auction result
- The auction featured two maturities, 355-day and 362-day OMO bills, each with N300 billion on offer. However, total sales exceeded the initial offering, as the CBN allotted N1.68 trillion, demonstrating robust investor appetite.
- For the 355-day bill, investors bid N760.70 billion, resulting in an allotment of N725.70 billion. The bid range for this tenor was 18.80% to 20.64%, with the final stop rate settling at 19.19%, marking a 2.13 percentage point drop from the previous auction.
- The 362-day bill saw even greater interest, attracting N1.12 trillion in subscriptions, with a final allotment of N951.20 billion. The bid range stood at 18.88% to 20.18%, while the stop rate closed at 19.45%, a 1.90 percentage point decline from the previous auction.
Why are stop rates falling?
The drop in stop rates comes amid continued efforts by the CBN to fine-tune liquidity management, balancing inflation control with the need to maintain investor confidence. The high demand for OMO bills suggests that investors remain keen on locking in risk-free yields, even at lower rates.
One key factor influencing rates is the recent rebasing of Nigeria’s Consumer Price Index (CPI) by the National Bureau of Statistics (NBS).
Under the new methodology, inflation for January 2025 was reported at 24.48%, significantly lower than the 34.80% recorded in December 2024 under the old framework.
This revision has fueled expectations that the CBN may not be under pressure to hike rates aggressively, contributing to the recent moderation in OMO yields.
Also, at its February 2025 Monetary Policy Committee (MPC) meeting, the CBN opted to hold the Monetary Policy Rate (MPR) steady at 27.50%, signaling a more cautious stance. The decision was based on the need to assess the impact of the rebased CPI and ensure that the inflation decline is sustained before making further policy adjustments.
However, despite the rate moderation, demand remains exceptionally high, particularly for the 362-day bill, which accounted for almost 60% of total subscriptions.
What you should know
- Nairametrics earlier reported that the Federal Government of Nigeria (FGN), through the Central Bank of Nigeria (CBN), released the results of its Treasury Bills (T-Bills) auction conducted on March 5, 2025.
- The auction, which offered N650 billion, saw strong investor demand, attracting N1.92 trillion in total subscriptions, with the bulk of bids directed at the 364-day instrument.
- Despite the heightened demand, the stop rate on the one-year bill fell to 17.82%, the lowest level since September 2024, as the Debt Management Office (DMO) continues to push back against rising borrowing costs.
