CBN Sells T-BillsWorth N7.9trn, Rejects N12.24trnBidsin Five Months

Kayode Tokede

Following growing investors’ appetite for naira assetsto hedge against double-digit inflation rate, the Central Bank of Nigeria (CBN) sold N7.9 trillion worth of Treasury bills (T-Bills)in the first five months of 2025.

The total amount of bills allotted to investors accounted for about 39.2 per cent of all subscriptions received at the 12 primary market auctions conducted in the first five months of the year.

Investors staked N20.13 trillion across 12 Treasury bills auctioned by the Debt Management Office (DMO) on behalf of the CBN as N6.02 trillion was total amounts offered to investors.

According to the CBN’s primary market data, out of the N20.13 trillion total subscription, a total of N12.24 trillion worth of bids submitted were rejected as the amount raised by the authority exceeded its target for five months of 2025.

T-Bills are typically issued by CBN to meet the government’s short-term financing needs and are considered a safe and low-risk investment.

THISDAY checks showed that the CBN increased interest rate during its NTB auction in first five months of 2025in a bid to lure investors.

For instance, stop rate on 91-day NTB auction rate in May 2025 stood at 18.5 per cent from 16.5per cent in May 2024, while the 182-day rate moved from 17.45per cent in May  2024 to  18.5per cent in May 2025.

In addition, the rate on 364-day  closed May 2025  at 19.50 per cent as against 20.69 per cent May 2024.

By tightening its monetary policy through higher interest rates and large NTBs auctions, the CBN aims to curb rising inflation and stabilise the foreign exchange rate, thereby fostering a more balanced economic environment. 

THISDAY observed that investors demand for long maturities NTBs continued to grow as its stop rate reached 20.32 per cent as of Feb 5, 2025, the highest so far this year.

The variation in stop rates across tenors also offers insight into investor sentiment regarding short-, medium-, and long-term economic outlooks.

While the lower stop rate on the 182-day bill suggests anticipation of stable interest rates, the higher stop rate on the 364-day NTBs could imply a cautious stance towards potential future economic volatilities.

Investors’ diversified demand across the different maturities of NTBs reflects strategic positioning for various investment horizons and signals a healthy trading environment in the Nigerian debt market.

The Mr. Olayemi Cardoso-led Monetary Policy Committee (MPC) of the CBN has jacked up the interest rate by 870 basis points to 27.50 per cent from 18.75 per cent at the start of the year to combat rising inflation, this has led to an equal increase in the yields of Treasury bills compared to last year.

Commenting, analysts at Cordros Research in a report titled, “Nigeria in 2025. Reform to Recovery: Navigating the Rebound,”said,  “Given our expectations of a pause in monetary policy rate hikes and a moderate pace of borrowings in 2025, we expect yields to pare, particularly towards the  second half of the year, after a further increase in Q1-2025.

“Specifically, we expect the onset of the disinflationary process in Q1-2025 and the pause in rate hikes, which should begin in March, to influence market sentiments.Additionally, while we expect the demand-supply imbalance to persist, the slower borrowing pace could cause yields to temper.

“Considering all the factors, we expect yields to decline and settle at c.18.5 per cent and c.18per cent on Treasury bills and bonds by 2025 year-end, reflecting our expectations of successful policy pass-throughs.”

On his part, Investment Banker & Stockbroker, Mr. Tajudeen Olayinka attributed the high yield to demand and supply, stressing that the government deliberately increased NTB supply to encourage higher stop rate above 20 per cent or that some institutional investors held back their bids.”

According to him, “The essence is to encourage foreign inflows that could help improve dollar liquidity in the foreign exchange market and cause a moderation in Naira exchange rate until the market attains equilibrium level.

“I have no doubt that this is the most appropriate decision on the part of CBN and the government at this time. There’s a need to improve dollar liquidity that will eventually force domestic interest rates to moderate subsequently.The higher interest rate will likely filter into the equity market to temporarily moderate the bullish sentiments in that market as well.”