Investors Pour N3.35tn Into T-Bills as CBN Cuts 1-Year Yield to 16.84 Percent

• Investors submitted N3.35 trillion in bids for N700 billion of Treasury bills at Wednesday’s auction, with demand concentrated on the one-year instrument.

• The CBN cut the 364-day bill’s stop rate to 16.84 percent, down 31 basis points from 17.15 percent at the previous auction.

• The latest move takes the one-year yield 75 basis points lower than the 17.59 percent recorded on August 12, despite sustained demand for government securities.

September 04, () — The Central Bank of Nigeria has continued to lower Treasury bill yields despite strong investor demand, cutting the stop rate on the benchmark 364-day instrument to 16.84 percent at its latest primary market auction.

Investors submitted N3.35 trillion worth of bids for Treasury bills valued at N700 billion, representing demand of almost five times the amount offered by the CBN.

The apex bank eventually allotted N865.71 billion across the three tenors, exceeding the advertised amount by N165.71 billion.

Investors favour one-year bills

The strongest demand remained concentrated at the long end of the market, with investors submitting N3.238 trillion for the N500 billion offered on the 364-day bill.

The CBN allotted N762.17 billion of the instrument, N262.17 billion above the amount initially advertised.

However, demand for shorter-dated securities was significantly weaker.

The 91-day bill attracted N76.82 billion in subscriptions against N100 billion on offer, with N76.28 billion allotted at an unchanged stop rate of 16.30 percent.

The 182-day instrument recorded N33.51 billion in bids against N100 billion offered, while the CBN allotted N27.27 billion at 16.50 percent.

The bills are scheduled to mature on December 3, 2026, March 4, 2027 and September 2, 2027, respectively.

One-year yield falls 75bps

The latest auction extends the decline in Treasury bill yields seen over the past month.

The 364-day stop rate fell from 17.59 percent on August 12 to 17.15 percent on August 26 before dropping further to 16.84 percent at Wednesday’s auction.

This represents a cumulative decline of 75 basis points from the 17.59 percent rate recorded on August 12.

The reversal follows a period of rising yields earlier in the year.

The one-year bill had moved from 16.35 percent on June 3 to 17.34 percent on June 17 and 17.70 percent on July 8 before reaching 17.59 percent in August.

The latest decline suggests the CBN is increasingly comfortable accepting lower yields even as investors continue to show strong appetite for government securities.

Market expects further easing

Wednesday’s 16.84 percent stop rate was also only marginally above the prevailing secondary-market yield of 16.74 percent, indicating that pricing at the auction remained broadly aligned with market conditions.

The sustained demand for the 364-day bill, despite the lower yield, highlights investors’ continued preference for locking in relatively attractive returns on longer-dated government securities.

The movement in Treasury bill yields is also likely to attract attention ahead of the CBN’s September Monetary Policy Committee meeting.

A continued decline in short-term government security yields could strengthen expectations that monetary conditions may gradually ease, particularly if liquidity conditions remain supportive and inflationary pressures continue to moderate.