Nigeria held its most recent treasury bills auction on February 19, 2025, drawing significant interest from investors. The total number of subscriptions for the three available tenors was N2.41 trillion.
The recent figure is however less than the N3.22 trillion that was raised at the last auction, which took place on February 5, 2025. The Central Bank of Nigeria (CBN) raised allotments across the tenors, especially for the 364-day bills, despite the decreased demand.
The drop in subscriptions may indicate a change in yield expectations and shifting investor sentiments which may have wider ramifications for the fixed-income market.
Breakdown Of The Treasury Bills Auction
- The auction results showed that the 91-day tenor, which had an offer size of N80 billion, received subscriptions totaling N62.14 billion, which was less than what was offered.
- The CBN ultimately allocated N34.77 billion at a stop rate of 17%, with bids ranging from 16% to 25%, indicating competitive interest among investors looking for short-term yields.
- The 182-day tenor, which had an offer size of N120 billion, received N49.88 billion in subscriptions, at a stop rate of 18%.
- The 364-day tenor reported an astounding N2.3 trillion in subscriptions, despite having an offer size of N500 billion. This category attracted the highest level of interest, with a stop rate of 18.43%.
- The demand for short-term government securities from investors remained strong, especially for the 91-day and 182-day tenors, which both showed a significant increase in subscriptions over the previous auction. N62.14 billion was subscribed for the 91-day bills, which is substantially more than the N42.37 billion that was sold at the auction on February 5.
- Subscriptions for the 182-day bills increased from N19.52 billion in the previous auction to N49.88 billion in the most recent round, reflecting a similar spike in demand. As macroeconomic conditions change, investors are looking for safer, shorter-term bills, which is reflected in the rise in demand for these shorter tenors.
- The 364-day bills, on the other hand, saw a sharp drop in demand, with subscriptions dropping from N3.16 trillion in the previous auction to N2.3 trillion in the most recent one. The CBN raised its allocation for this tenor despite this decline, offering N704.38 billion. This is higher than the N619.36 billion from the previous auction.
- While the 182-day bills settled at 18%, down from 18.5%, the 91-day bills cleared at a stop rate of 17%, down from 18% at the prior auction.
- The 364-day bills saw the biggest change, with the stop rate dropping from 20% on February 5 to 18.43% at the February 19 auction.
Conclusion
According to information available to 9am News Nigeria, the recently offered treasury bills will mature on May 22, 2025 (91-day tenor), August 21, 2025 (182-day tenor), and February 19, 2026 (364-day tenor), providing different timeframes for investment strategies and liquidity planning.
One of the most notable observations is the drop in stop rates for all three tenors of the most recent auction. It indicates that investors were prepared to accept somewhat lower yields.
The decreased level of demand for the 364-day bills could reflect a shift in market expectations, with investors assessing inflationary risks, monetary policy direction, and alternative investment alternatives.
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