The Federal Government of Nigeria, through the Central Bank of Nigeria (CBN), has released the results of its Treasury Bills (T-Bills) auction conducted on February 5, 2025. The auction, featuring three tenors—91-day, 182-day, and 364-day—witnessed a strong investor appetite, particularly for the one-year instrument, which saw subscriptions surpassing N3.1 trillion.

Breakdown of Auction Results

91-Day Treasury Bills

• Offer: N50 billion

• Subscription: N42.37 billion

• Allotment: N31.94 billion

• Range of bids: 17.00% – 22.00%

• Stop rate: 18%

• Maturity date: May 8, 2025

182-Day Treasury Bills

• Offer: N120 billion

• Subscription: N19.52 billion

• Allotment: N18.69 billion

• Range of bids: 17.50% – 22.00%

• Stop rate: 18.5%

• Maturity date: August 7, 2025

364-Day Treasury Bills

• Offer: N500 billion

• Subscription: N3.16 trillion

• Allotment: N619.36 billion

• Range of bids: 19.89% – 24.30%

• Stop rate: 20%

• Maturity date: February 5, 2026

In total, the CBN received subscriptions amounting to N3.218 trillion, while the total allotment stood at N670 billion.

Key Takeaways from the Auction

1. Surging Demand for 364-Day Bills: Investors showed overwhelming interest in the one-year instrument, with subscriptions exceeding N3.1 trillion against the N500 billion offered. This reflects a strong preference for higher-yielding, longer-tenured securities amid prevailing economic conditions.

2. Lower Subscription for Shorter Tenors: The 91-day and 182-day bills saw lower-than-offered subscription levels, with the 182-day instrument recording a significant shortfall, attracting just N19.52 billion out of the N120 billion offered.

3. Competitive Rates: The stop rates for the three tenors settled at 18% (91-day), 18.5% (182-day), and 20% (364-day), reflecting tight liquidity conditions and investor demand for higher returns.

4. Government’s Liquidity Management Strategy: The CBN’s allocation of N619.36 billion for the 364-day bills indicates a strategic effort to attract liquidity for government financing while balancing market interest rates.

Market Implications

• Investor Sentiment & Yield Expectations: The results of this auction suggest that investors are leaning toward longer-tenured instruments to lock in higher yields, given expectations of future monetary policy adjustments.

• Inflation & Liquidity Dynamics: With inflation concerns and tight monetary conditions persisting, the demand for risk-free government securities remains robust.

• Impact on Fixed-Income Market: The stop rates indicate that the government is willing to pay a premium to attract investors, particularly for the 364-day bills. This trend could influence future bond yields and impact overall liquidity in the fixed-income market.

• Institutional Investor Strategy: Investors, particularly institutional players, may continue to favor Treasury Bills as a hedge against inflation and a relatively risk-free investment option in Nigeria’s volatile economic landscape.

Broader Economic Context

The CBN had previously issued N2.2 trillion worth of maturing Nigerian Treasury Bills (NTBs) in the fourth quarter of 2024 as part of its re-issuance program. This ongoing effort aligns with the government’s strategy to manage liquidity, sustain the financial market, and maintain economic stability.

With the latest auction results, analysts expect continued strong demand for high-yielding government securities, as investors navigate the evolving monetary landscape in 2025.