Nigerian Treasury Bills (T-Bills) auctions continue to witness strong demand from investors, particularly for longer-dated instruments.
At the auction held on Wednesday, the Debt Management Office (DMO), on behalf of the Central Bank of Nigeria (CBN), offered N530 billion in standard maturities. While subscription for shorter-term bills (91-day and 182-day) remained subdued, the 364-day bill attracted a staggering N2.49 trillion in bids.
A total of N756.01 billion was allotted, with the 364-day bill receiving the lion’s share. The stop rate for the 364-day bill settled at 21.80 percent.
Tunde Amolegbe, Managing Director of Arthur Steven Asset Management, explained that the sustained interest in longer-term T-Bills reflects investor preference for locking in higher yields in the current high-interest rate environment.
“This trend has been consistent in recent months, as it makes more sense to lock in funds for a longer period in a high-interest rate environment than to face reinvestment risk with short-term positions,” Amolegbe stated.
He further suggested that the relatively low stop rate on the 364-day bill could signal a potential rate cut by the CBN’s Monetary Policy Committee (MPC) in the near future.
“The FX market has been relatively stable recently, and inflation growth has slowed. This is reflected in today’s auction results, with the stop rate for the long-term bill at 21.80 per cent, compared to over 22 per cent in the previous auction,” Amolegbe added.
In the secondary market, the average yield on Nigerian Treasury bills dipped slightly on Tuesday, driven by increasing demand for naira-denominated fixed-income assets. Yields declined by two basis points to settle at 25 percent.
Investors Flock to Long-Term Treasury Bills as CBN Rate Cut Looms
