Investors Pile into 364-day Treasury Bills as Yields Lure Over N1trn

Samuel Mobolaji

Investor appetite for long-term government securities reached new highs at the May 21 Treasury Bills auction, with the 364-day tenor attracting a staggering N1.05 trillion—more than triple the Central Bank of Nigeria’s N350 billion offer.

The CBN, responding to overwhelming demand, raised the allotment to N503 billion, underscoring investors’ strong preference for locking in elevated yields amid persistent inflation and policy uncertainty. The auction saw total subscriptions of N1.17 trillion across all tenors, far exceeding the N500 billion offered.

The long-dated paper offered a true yield of 24.31 per cent, a compelling proposition for investors seeking to hedge against inflation, which remains above 23 per cent. In contrast, the 91-day and 182-day bills offered yields of 18.86 per cent and 20.40 per cent, respectively, drawing more modest interest.

While the CBN kept rates mostly unchanged, the marginal adjustments reflect a delicate balancing act, curbing borrowing costs while maintaining market confidence. The auction followed the apex bank’s 300th Monetary Policy Committee meeting, where the Monetary Policy Rate was held steady at 27.50 per cent for a second consecutive time in 2025, signalling a cautious pause in the tightening cycle after a series of hikes in 2024.

With expectations of potential rate declines later in the year, the rush into longer-tenured bills signals strategic positioning by institutional investors, pension funds, and asset managers looking to secure high returns ahead of a possible easing trend. Despite tighter conditions, the 364-day segment remains a magnet for liquidity, reinforcing its role as a benchmark for market sentiment in a volatile economic climate.