Nigeria's Treasury bill yields increased slightly at Wednesday's primary market auction despite sustained investor demand. The Central Bank of Nigeria (CBN) recorded a stop rate of 16.35 percent on the 364-day bill, up from 16.15 percent at the May 20 auction. Investors subscribed to N1.95 trillion worth of the one-year instrument against an offer of N500 billion, leading the CBN to allot N1.24 trillion on that tenor. The 364-day bill accounted for the majority of total allocations.
The 91-day Treasury bill saw subscriptions of N131.18 billion against an offer of N100 billion, with a stop rate of 16.05 percent, up from 15.95 percent. Full allotment was made on this tenor. The 182-day bill attracted N83.55 billion in bids against N50 billion offered, with N82.98 billion allotted. Its stop rate rose to 16.19 percent from 16.14 percent. Ayodeji Ebo, managing director of Afrinvest Securities, attributed the strong demand to investors seeking attractive yields on longer-dated instruments.
Ebo noted the 364-day bill remains appealing for those locking in near 20 percent annualised returns. Meristem had predicted stable pricing ahead of the auction, citing strong system liquidity and reinvestment flows. System liquidity was estimated between N5.5 trillion and N6.3 trillion, with maturities of about N464.6 billion against a total offer of N700 billion. The slight yield increase breaks a recent trend of declining rates, as the 364-day rate had fallen from 16.73 percent in early March to 16.15 percent on May 20. Analysts expect continued demand for Treasury bills due to sustained appetite for risk-free government securities.
The Central Bank of Nigeria allowed yields to rise even as investors poured over three times the offered amount into one-year bills, suggesting the central bank could have held rates steady but chose not to. This decision to raise the stop rate on the 364-day bill comes despite massive oversubscription, indicating a shift in monetary stance or supply strategy. With N1.24 trillion allocated to the one-year paper, the move directly affects returns for investors who locked in at the new rate. The outcome contrasts with expectations of stable pricing, raising questions about how the CBN is balancing liquidity management with investor demand.
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