The Central Bank of Nigeria (CBN) has announced plans to auction N670 billion worth of Treasury bills to manage liquidity in the financial system. These short-term government securities will be available in three different maturities: 91-day, 182-day, and 364-day bills.
The auction comes as previously issued Treasury bills worth N955.369 billion are set to mature this week, and part of this maturing amount is expected to be refinanced through the new auction.
Given the high level of cash available in the banking system, the auction is expected to be oversubscribed, continuing the trend seen in recent months. Investors have shown strong interest in Treasury bills, particularly in longer-term options that offer higher returns.
In January, the Debt Management Office (DMO) raised N1.27 trillion through Treasury bill auctions, representing a 21.40% decrease compared to the N1.67 trillion raised in December 2024. At the most recent auction, the DMO initially planned to raise N530 billion but received bids totaling N2.5 trillion, resulting in a bid-to-offer ratio of 4.8x.
Treasury bills were issued across three durations: 91-day, 182-day, and 364-day bills. The 364-day bills attracted the most demand as investors sought to lock in current high yields amidst uncertainty about future monetary policy changes. Despite the strong demand, the DMO only sold N756.0 billion worth of bills, maintaining stable interest rates.
Investment firm Afrinvest noted that investors continue to favor longer-term Treasury bills due to concerns over possible changes in monetary policy following adjustments to Nigeria’s Consumer Price Index (CPI) calculations. This preference for longer-term instruments suggests that investors want to secure high returns before potential shifts in interest rates.
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