The Central Bank of Nigeria (CBN) allotted ₦1.49 trillion at its Treasury bills primary market auction held on Wednesday, June 17, as yields rose sharply across all maturities amid persistent inflation pressures.
According to auction data, total subscriptions hit ₦1.863 trillion against an offer size of ₦1 trillion, reflecting a bid-to-offer ratio of 1.9x. The apex bank ultimately allotted ₦1.491 trillion to absorb excess liquidity in the financial system.
The auction comes as Nigeria’s inflation rate stood at 15.93% in May, sustaining pressure on fixed-income investors to demand higher returns on government securities.
Analysts said investor behaviour continues to reflect expectations of prolonged elevated interest rates, with strong demand concentrated at the longer end of the curve.
The most significant movement was recorded in the 364-day Treasury bill, where the stop rate rose by 99 basis points to 17.34%, marking the largest single-tenor increase in recent auctions.
Demand for the one-year instrument dominated market activity, accounting for about 89.3% of total subscriptions and 86.6% of total allotments.
The 91-day bill also saw an increase in stop rates to 16.28%, while the 182-day bill rose to 16.50%, although it was the only tenor that recorded undersubscription during the auction.
Market data showed that investors continued to favour either short-term liquidity instruments or higher-yielding long-dated bills, leaving the mid-tenor less attractive in the current rate environment.
The 91-day bill was slightly oversubscribed at ₦129.69 billion, while the 182-day bill attracted only ₦70.22 billion in subscriptions compared to an offer of ₦100 billion.
The strong demand for longer-dated instruments reflects growing investor appetite for yield amid expectations that inflationary pressures will remain sticky and monetary policy will stay tight.
The Central Bank of Nigeria (CBN) has continued to maintain a tight monetary stance, with its Monetary Policy Rate held at 26.50%, keeping a wide spread above both Treasury bill and bond yields.
At the same time, Open Market Operations (OMO) rates remain significantly higher, with recent stop rates ranging between 20.37% and 21.80%, reinforcing Nigeria’s tiered fixed-income structure.
Secondary market yields also moved higher, with Treasury bill yields settling between 16.5% and 17.89%, while average bond yields rose to about 16.89%.
The June 17 auction marks the second consecutive issuance cycle in which stop rates have increased across all maturities, underscoring a continued repricing of risk in Nigeria’s fixed-income market.
Despite rising yields, the Central Bank of Nigeria (CBN) allotted nearly 50% more than its initial offer size, signalling its willingness to absorb liquidity at prevailing market conditions.
Market analysts say sustained inflation and tight monetary policy are likely to keep yields elevated in the near term, with investors expected to continue favouring longer-dated securities for higher returns.
