The Central Bank of Nigeria (CBN) has announced plans to offer N400 billion worth of Treasury Bills at the midweek primary market auction, slashing the size of its offering by half compared to the previous auction, which witnessed an undersubscription.
Earlier in April, the apex bank conducted an auction worth N800 billion—up from N700 billion at the March sale. However, investor appetite waned, with total subscriptions dropping by 21.23% to N1.13 trillion, down from N1.43 trillion in the March auction.
Consequently, the CBN allotted only N424.58 billion, marking the lowest allotment since December 2024. Analysts attributed the underwhelming demand to higher rate expectations and subdued interest, which prompted a rise in stop rates for shorter-tenured instruments.
Specifically, the stop rates for the 91-day and 182-day tenors increased to 18.50% and 19.50%, respectively—up from 18.00% and 18.50% in the prior auction. The 364-day bill, however, held steady at 19.63%. This cautious investor sentiment extended into the secondary fixed-income market, which recorded significant sell-offs across both bonds and Treasury bills.
“While the first quarter of 2025 generally saw a decline in yields for newly issued fixed-income instruments, March deviated from this trend due to persistent liquidity constraints and continued debt supply,” Meristem Securities Limited stated in a market update.
“This reversal aligns with our earlier outlook for the first half of 2025, which projected a bearish trend and yield curve flattening amid the government’s heightened borrowing needs and tight monetary policy.”
In total, the CBN conducted eight Treasury Bills auctions in Q1 2025, up from seven in Q4 2024. The increase stemmed from an additional auction held in March, raising that month’s count to four—one more than the typical quarterly schedule.
This expansion was likely influenced by the government’s rising borrowing requirements and the opportunity to capitalize on favorable investor demand and relatively low borrowing costs.
Overall, the CBN issued N5.54 trillion in bills during Q1 2025, reflecting a 37.88% increase from the previous quarter and a marginal 0.17% dip compared to Q1 2024.
Auction stop rates showed notable variations throughout Q1 2025. While the 91-day and 182-day instruments maintained steady rates of 18.00% and 18.50%, respectively, through January and February, the first auction in March saw rates dip to 17.00% and 17.75% amid strong demand and market expectations for lower rates.
However, this trend was short-lived. At the second March auction, the 91-day bill remained unchanged, while the 182-day tenor inched up by 2 basis points to 17.79%, signaling a gradual softening in demand amid tightening liquidity.
By the third auction of the month, stop rates for both bills rebounded to 18.00% and 18.50%, where they remained through the end of the quarter.
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