Treasury Bills Auction Draws N2.41tn Despite Falling Rates

The latest treasury bills auction in Nigeria, held on February 19, 2025, attracted a notable N2.41 trillion in subscriptions across the three tenors offered, even though this was a drop from the N3.22 trillion recorded in the February 5 auction.

Despite the reduced demand, the Central Bank of Nigeria (CBN) increased allotments across the tenors, especially for the 364-day bills, while stop rates decreased.

The fall in stop rates indicates shifting investor sentiment and adjusted yield expectations, which could impact the broader fixed-income market.

Auction Breakdown For the 91-day tenor, the CBN offered N80 billion but received subscriptions totaling N62.14 billion, lower than the amount offered. Eventually, N34.77 billion was allotted at a stop rate of 17%. Bids for this tenor ranged from 16% to 25%, showing a competitive landscape among investors seeking short-term returns.

The 182-day tenor, with an offer size of N120 billion, attracted N49.88 billion in subscriptions, and N34.98 billion was allotted at a stop rate of 18%. Bid rates for this tenor ranged from 17.24% to 22.5%, indicating a relatively tighter spread than the shorter tenor.

The 364-day tenor saw the highest interest, with an offer size of N500 billion but garnering a staggering N2.3 trillion in subscriptions. The CBN allotted N704.38 billion at a stop rate of 18.43%. Bids for this tenor ranged from 16.5% to 25%, suggesting strong competition among institutional investors for long-term government securities.

Investor demand for short-term government securities remained strong, especially for the 91-day and 182-day tenors, which saw significant increases in subscriptions compared to the previous auction. Subscriptions for the 91-day bills rose to N62.14 billion, markedly higher than the N42.37 billion recorded in the February 5 auction.

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Similarly, demand for the 182-day bills surged, with subscriptions increasing from N19.52 billion in the previous auction to N49.88 billion in the latest one. This rise reflects a strategy driven by liquidity, with investors seeking safer, short-term placements amid changing macroeconomic conditions.

Conversely, demand for the 364-day bills fell considerably, with subscriptions dropping from N3.16 trillion in the previous auction to N2.3 trillion in the latest one. Despite this decline, the CBN increased its allotment for this tenor to N704.38 billion, up from N619.36 billion in the earlier auction. This indicates the central bank’s effort to balance investor demand with its liquidity management strategy. The reduced demand for the 364-day bills may reflect shifting market expectations, with investors considering inflation risks, monetary policy directions, and other investment opportunities.

Declining Stop Rates A key outcome of the latest auction was the decline in stop rates across all three tenors, indicating investors’ willingness to accept slightly lower yields.

The 91-day bills cleared at a stop rate of 17%, down from 18% in the previous auction. The 182-day bills settled at 18%, compared to 18.5% previously. The most notable change was in the 364-day bills, where the stop rate dropped to 18.43% from 20%.

The maturity dates for the successful bids are set for May 22, 2025 (91-day tenor), August 21, 2025 (182-day tenor), and February 19, 2026 (364-day tenor), offering various durations for liquidity planning and investment strategies.