The Central Bank of Nigeria (CBN) has reduced its Nigerian Treasury Bills (NTBs) offer to N400 billion at this week’s primary market auction, following a significant under allotment at the previous sale. This move marks a 50% cut from the earlier N800 billion auction, reflecting a shift in strategy due to waning investor interest.

During the first NTB auction in April, demand fell short despite an expanded offer size. Total subscriptions dropped to N1.13 trillion—a 21.23% decline from the N1.43 trillion recorded in March. Consequently, actual allotments were capped at N424.58 billion, marking the lowest allocation since December 2024.

Analysts attribute the reduced investor appetite to rising interest rate expectations and tighter liquidity. In response, the CBN adjusted stop rates on shorter-term instruments upward. The 91-day and 182-day bills cleared at 18.50% and 19.50%, up from 18.00% and 18.50%, respectively, while the 364-day rate held steady at 19.63%.

This trend of subdued sentiment extended into the secondary fixed-income market, where bearish pressure prompted broad sell-offs across bonds and treasury bills.

“While Q1 2025 was largely defined by a downward trajectory in fixed-income rates, reflecting improved macroeconomic indicators, March introduced a reversal,” noted analysts at Meristem Securities Limited. “System liquidity constraints and sustained debt issuance drove a yield curve shift, consistent with our H1:2025 outlook projecting bear flattening amid heightened government borrowing and monetary tightening.”

Throughout Q1:2025, the CBN conducted eight NTB auctions, surpassing the seven held in Q4:2024. The deviation was driven by an additional auction in March, bringing the month’s total to four. The increase was likely influenced by the government’s rising financing needs and an attempt to leverage earlier strong demand amid low borrowing costs.

In total, the apex bank sold N5.54 trillion worth of treasury bills in Q1:2025—representing a 37.88% rise from Q4:2024, though slightly down by 0.17% year-on-year.

Auction dynamics throughout the quarter showcased shifting trends in stop rates. The 91-day and 182-day tenors maintained stability at 18.00% and 18.50% through January and February. In early March, strong investor demand pushed rates down to 17.00% and 17.75%, respectively. However, by mid-March, rates began to climb again, settling at 18.00% and 18.50% by quarter-end as liquidity conditions tightened.

The evolving auction outcomes underscore the central bank’s balancing act between managing market expectations and navigating an increasingly complex macro-financial environment.