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Investors submitted ₦3.38 trillion in bids for the one-year Treasury Bill against a ₦500 billion offer, highlighting sustained appetite for long-term government securities despite declining yields.
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The CBN lowered the stop rate on the 364-day bill to 17.35 percent, signalling easing borrowing costs even as it allotted more than double the amount initially offered.
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Analysts say strong liquidity and aggressive demand for government securities continue to raise concerns over the crowding-out effect on private sector borrowing.
July 30, (THEWILL) — The Central Bank of Nigeria (CBN) reduced the yield on its benchmark one-year Treasury Bill at Wednesday’s primary market auction after investors flooded the auction with ₦3.38 trillion in bids for the 364-day instrument against an offer of ₦500 billion.
Auction results released by the apex bank showed that the one-year bill remained the overwhelming favourite among investors, attracting demand nearly seven times the amount offered, even as the stop rate declined by 31 basis points to 17.35 percent from 17.66 percent recorded at the previous auction.
Overall, the CBN offered ₦700 billion across the three maturities comprising ₦100 billion each for the 91-day and 182-day bills and ₦500 billion for the 364-day instrument. Total subscriptions reached ₦3.62 trillion, while the apex bank allotted about ₦1.25 trillion across the three tenors.
Demand remains concentrated on one-year bill
The 364-day Treasury Bill accounted for virtually all investor demand during the auction.
Against the ₦500 billion offer, investors submitted bids worth ₦3.38 trillion, while the CBN eventually allotted about ₦1.02 trillion, more than double the amount initially offered. Bid rates ranged between 16.98 percent and 20.00 percent, with the stop rate settling at 17.35 percent.
The development continues the trend seen throughout July, where institutional investors consistently concentrated their investments on the longest tenor available.
Earlier this month, the one-year instrument attracted ₦2.87 trillion in bids at the July 15 auction and ₦1.86 trillion during the July 8 sale, underscoring sustained appetite for longer-dated government securities.
Short-term bills record modest oversubscription
The shorter-tenor instruments also attracted healthy participation, although demand remained significantly below that of the one-year bill.
The 91-day Treasury Bill received subscriptions of ₦135.74 billion against an offer of ₦100 billion, with the CBN allotting ₦130.72 billion. The stop rate remained unchanged at 16.30 percent.
Similarly, the 182-day bill attracted ₦104.74 billion in subscriptions against a ₦100 billion offer. The apex bank allotted ₦99.18 billion while retaining the stop rate at 16.50 percent.
Lower yield reflects stronger liquidity
Market analysts said the decline in the one-year stop rate points to improving liquidity within the financial system as investors appeared willing to accept lower returns in exchange for locking in longer-term government securities.
The CBN also maintained its recent strategy of allotting significantly above the advertised offer size for the one-year instrument, a move aimed at absorbing excess liquidity while supporting the Federal Government’s short-term financing programme.
The July 29 auction marked the final Treasury Bills sale for the month and forms part of the CBN’s third-quarter issuance programme targeting ₦5.8 trillion in gross borrowings.
Despite the moderation in yields, analysts noted that returns on Treasury Bills remain attractive relative to other fixed-income instruments. However, private sector groups have continued to urge the apex bank to lower stop rates more aggressively, arguing that elevated government borrowing costs continue to divert capital away from businesses seeking financing.
Ogochukwu Onwaeze is a writer specializing in business and economic journalism. At THEWILL News Media, she translates market trends, financial developments, and policy shifts into clear and engaging stories.
