Nigeria: CBN Raises Interest Rates on Treasury Bills Amid Strong Investor Demand, Falls Short on Allotment

The Central Bank of Nigeria (CBN), in collaboration with the Debt Management Office (DMO), has increased interest rates on Nigerian Treasury Bills (NTBs) at its latest midweek primary market auction (PMA), signaling a tightening monetary stance and a strategic move to attract investors in an evolving global financial landscape.

During Wednesday’s auction, the apex bank floated N800 billion worth of Treasury bills across the usual maturities—91-day, 182-day, and 364-day tenors. Despite economic headwinds, investor appetite for naira-denominated fixed-income instruments remained resilient. Total subscriptions reached an impressive N1.13 trillion, underscoring continued confidence in sovereign debt and the relative security of government-backed instruments.

Notably, investor preference leaned heavily toward the 364-day paper, which accounted for a significant 80% of total bids. However, the bid-to-offer ratio moderated to 1.41x—down from 2.04x recorded in the previous auction—suggesting a more cautious yet still active investment posture in the fixed-income market.

The CBN ultimately allotted N424.58 billion in Treasury bills, falling short of the initial offer by 47%. Of this amount, the 364-day tenor made up nearly half (49%) of the total allotment, further emphasizing the market’s inclination toward longer-term, higher-yield securities.

In terms of yields, stop rates on the 364-day bill held steady at 19.63%. Meanwhile, shorter-dated papers experienced rate hikes, with the 91-day and 182-day maturities closing at 18.50% and 19.50%, reflecting increases of 50 and 100 basis points respectively. These rate adjustments are indicative of the CBN’s strategy to balance inflation control with investment attractiveness.

Market activity in the secondary NTB segment remained subdued as attention shifted toward the auction. The DMO’s offer of N800 billion came up short against N927 billion in maturing bills, prompting conservative trading patterns. This cautious stance contributed to a slight moderation in average NTB yields, which settled at 21.18%.

As the CBN continues to implement its monetary policy tools to manage liquidity and bolster the naira, the Treasury bills market remains a critical instrument in Nigeria’s broader regulatory framework for financial stability and risk mitigation.