The Central Bank of Nigeria’s (CBN) recent Treasury Bills (T-Bills) auction held on May 21, 2025, witnessed a remarkable turnout, attracting bids totaling N1.17 trillion. This figure far exceeded the N500 billion worth of securities offered across the 91-day, 182-day, and 364-day tenors, underscoring robust investor appetite for Nigerian government debt amid persistent inflation and a relatively stable interest rate environment.
The auction results revealed that the overwhelming demand was for the 364-day Treasury Bills, with bids exceeding N1.05 trillion—nearly 90% of total subscriptions and more than three times the N350 billion initially on offer for this tenor. In response, the CBN increased the allotment for the one-year instrument to N503 billion, reflecting the central bank’s strategy to effectively manage liquidity while providing attractive yields for investors.
Shorter-term bills also garnered interest, though to a lesser extent. The 91-day T-Bills attracted N72.56 billion in bids against a N50 billion offer, with an allotment of N71.67 billion. Meanwhile, the 182-day tenor, which had a N100 billion offering, recorded bids of N46.84 billion and an allotment of N41.13 billion. The preference for the 364-day bills indicates investors’ desire to lock in higher yields amid expectations that monetary policy might ease later in the year.
Despite the surge in demand, the CBN slightly lowered the stop rate on the 364-day bills by seven basis points, from 19.63% to 19.56%. The 91-day and 182-day rates were maintained at 18.00% and 20.00%, respectively. However, the effective yield on the 364-day instrument remained attractive at 24.31%, outpacing the yields on the shorter tenors, which stood at 20.40% for the 182-day and 18.86% for the 91-day bills.
This stable yield environment follows the Monetary Policy Committee’s (MPC) decision to hold the Monetary Policy Rate (MPR) steady at 27.50% during its latest meeting, marking a pause after six consecutive rate hikes in 2024. This hold signals a more predictable policy stance, reassuring fixed-income investors and contributing to the strong bids witnessed at the auction.
The strong oversubscription of the Treasury Bills auction highlights several key dynamics in Nigeria’s financial markets. First, excess liquidity in the banking sector is prompting investors to seek safe, fixed-income instruments. Second, alternative investment avenues remain limited amid economic uncertainties, boosting the appeal of government securities. Third, with inflation hovering above 23%, T-Bills provide a rare opportunity for positive real returns, making them a preferred choice for risk-averse investors.
The Nigerian government’s reliance on domestic borrowing to finance its budget has intensified in recent years, making the Treasury Bills market a critical source of funding. The CBN’s balanced approach to managing yields, combining careful stop rate adjustments with increased allotments, aims to sustain investor confidence without crowding out private sector borrowing.
Looking ahead, market analysts anticipate continued strong participation in upcoming auctions, driven by persistent inflationary pressures and cautious optimism about potential monetary easing later in 2025. The CBN’s focus on liquidity management, coupled with the Federal Government’s financing needs, will keep the Treasury Bills segment vibrant and essential for Nigeria’s economic stability.
The auction also signals growing sophistication among domestic investors, including banks, pension funds, and asset managers, who are increasingly leveraging fixed-income securities to balance portfolios and secure steady returns.
The May 2025 CBN Treasury Bills auction is a clear indication of investor confidence in Nigerian government debt instruments despite ongoing macroeconomic challenges. The substantial oversubscription and strategic adjustments by the CBN reflect a dynamic interplay between policy measures and market demand. As Nigeria continues its journey toward economic recovery and stability, Treasury Bills will remain a vital tool for financing and investment, offering a safe haven for investors seeking reliable yields in a fluctuating environment.