CBN Reduces Nigerian Treasury Bills Offer after Under Allotment
The Central Bank of Nigeria (CBN) will open Treasury bills worth N400 billion for subscriptions at the midweek primary market auction. This amount is half of the previous auction sales that resulted in under allotment.
The first auction sales in April conducted by the Central Bank of Nigeria (CBN) issued a total of N800 billion, which was also higher than the N700 billion in the previous auction. Investor demand was softer compared to the previous auction, with total subscriptions declining by 21.23% to N1.13 trillion from N1.43 trillion at the prior auction in March.
As a result, allotments were significantly below the offer size, totaling N424.58 billion, the lowest since December 2024’s auction. According to analysts, stop rates were adjusted upward for the shorter tenors, reflecting the softer demand and heightened rate expectations during the auction.
The 91-day and 182-day instruments cleared at 18.50% and 19.50%, respectively, from 18.00% and 18.50%, while the 364-day rate remained unchanged at 19.63%. The bearish momentum persisted in the secondary fixed-income market this week, with widespread sell-offs across both the bonds and T-bills segments.
“While Q1:2025 was generally characterised by declining rates on new fixed-income issuances, driven by improving macroeconomic conditions, March presented a notable deviation.
“The yield curve shifted upward in response to persistent system liquidity constraints and continuous debt supply, partially reversing the gains of the preceding month.
“This divergence aligns with our earlier outlook for H1:2025, which anticipated a bearish bias and bear flattening, driven by elevated government borrowing needs and tight monetary conditions,” Meristem Securities Limited said in an update.
In Q1:2025, the CBN conducted eight Treasury Bills (T-bills) auctions, up from seven in Q4:2024. The uptick was driven by an extra auction held in March, bringing the number of auctions for the month to four instead of the usual three-per-month scheduled at the end of a quarter.
The move was likely influenced by the government’s increased borrowing needs, as well as an opportunity to take advantage of strong investors’ demand and the prevailing low borrowing costs.
Overall, the CBN sold N5.54 trillion worth of bills in Q1:2025, a 37.88% increase from the prior quarter and a 0.17% decline from Q1:2024.
Stop rates at the auctions exhibited notable shifts across all tenors in Q1:2025. For the 91-day and 182-day bills, rates remained steady at 18.00% and 18.50%, respectively, from early January through February.
However, at the first auction in March, stop rates on both tenors dropped to 17.00% and 17.75%, respectively, supported by strong investor demand and sustained expectations of a downward shift in rates.
Nonetheless, the downward trend was brief, and by the second auction in March, the 91-day remained stable, while the 182-day bill rose by 2 bps to 17.79%, as demand began to soften amid a tight liquidity environment.
By the third auction, rates on both maturities rebounded to their earlier levels of 18.00% and 18.50%, respectively, and held steady through the quarter-end #CBN Reduces Nigerian Treasury Bills Offer after Under Allotment US Dollar Slides as Trade Tensions Cloud Sentiment
