CBN opens N700bn Treasury Bills auction as investors seek higher yields
The Central Bank of Nigeria (CBN) will offer N700 billion worth of Treasury bills for subscription on Wednesday as investors continue to demand higher returns amid elevated inflation and a high-interest-rate environment.
According to a circular issued by the apex bank, the auction will comprise N100 billion in 91-day Treasury bills, N100 billion in 182-day bills, and N500 billion in 364-day bills, with the one-year tenor expected to attract the strongest investor demand.
The auction is aimed at partly refinancing maturing Treasury bills worth N269.36 billion across the three standard maturities, while providing investors with fresh opportunities to lock in attractive short-term yields.
Market analysts expect robust subscription levels, supported by ample liquidity in the financial system and rising yields across the fixed-income market. Investor appetite has remained strong as inflation continues to erode real returns, prompting demand for higher-yielding government securities.
Headline inflation rose to 15.93 per cent, while the Monetary Policy Committee (MPC) recently retained the Monetary Policy Rate (MPR) at 26.5 per cent, reinforcing expectations that interest rates will remain elevated in the near term.
The June Treasury bills auction reflected the prevailing market sentiment, with investors demanding higher rates across all maturities.
The CBN allotted N129.32 billion in 91-day bills at a stop rate of 16.28 per cent, up from 16.05 per cent at the previous auction.
Demand for the 182-day instrument remained relatively weak, with subscriptions of N70.22 billion against the N100 billion on offer. The apex bank allotted N70.17 billion at a higher stop rate of 16.50 per cent, compared with 16.19 per cent previously.
Analysts expect the 364-day bill to remain the most sought-after instrument at this week’s auction, with yields likely to edge above 17.34 per cent if demand remains strong. The 182-day tenor, however, may continue to attract weaker subscriptions unless pricing becomes more attractive.
In the secondary market, Treasury bill trading remained subdued last week as sell-side pressure across short- and medium-term maturities pushed the average yield higher by six basis points to 18.65 per cent.
The sustained rise in yields reflects investors’ preference for safer government securities as they seek to preserve returns in an environment of elevated inflation and tight monetary policy.
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