Demand For Fixed Income Securities Surges As FG Sells ₦1.44trn Treasury Bills

The attractiveness of Treasury Bills (T-bills) continues to rise as the Central Bank of Nigeria (CBN) intensifies its monetary tightening measures to curb inflation.

Data from the Debt Management Office (DMO) revealed that T-bills worth ₦1.44trn were sold in February 2025 across various auctions, marking a 13.62 per cent (₦173.11bn) month-on-month increase from the ₦1.27trn recorded in January.

This trend was highlighted in the FMDQ Markets Monthly Report for February, obtained by THE WHISTLER. The report underscores the growing investor appetite for government securities amid a high-interest-rate environment, spurred by the CBN’s decision to retain the Monetary Policy Rate (MPR) at 27.5 per cent.

The CBN Governor, Mr. Olayemi Cardoso, reaffirmed the apex bank’s stance at the conclusion of the latest Monetary Policy Committee (MPC) meeting.

“The committee was unanimous in its decision to hold all parameters and thus decided as follows: retain the MPR at 27.50 per cent, retain the asymmetric corridor around the MPR at plus 500 to minus 100 basis points, retain the cash reserve ratio of deposit money banks at 50 per cent and merchant banks at 16 per cent, and retain the liquidity ratio at 30 per cent,” Cardoso stated.

This policy direction has driven up yields on government securities, making them highly attractive to investors seeking low-risk, high-return opportunities.

The elevated MPR has sparked a surge in demand for T-bills, drawing significant interest from institutional and retail investors eager to capitalize on higher yields.

In addition to the spike in T-bill sales, the DMO also recorded a strong performance in Federal Government of Nigeria (FGN) Bonds, selling ₦910.39bn in February 2025—reflecting a 51.47 per cent (₦309.35bn) MoM increase from ₦601.04bn in January.

The FMDQ Markets Monthly Report further revealed that sovereign securities remained in high demand, with T-bills and FGN Bonds oversubscribed by 1,097.10 per cent and 366.35 per cent, respectively.

Meanwhile, the CBN’s Open Market Operations (OMO) saw a slight dip in activity, with OMO Bills sales totaling ₦1.39trn in February, representing a 6.94 per cent (₦104.15bn) decline from ₦1.50trn in January.

Despite the lower issuance volume, investor enthusiasm remained strong, with OMO Bills oversubscribed by 219.26 per cent.

The FMDQ Exchange recorded no new listings in February 2025. However, the redemption of ₦7.50bn in non-sovereign bonds reduced the total outstanding value of non-sovereign bonds to ₦2.24trn.

Additionally, the total value of commercial papers (CPs) quoted on the exchange fell by 31.86 per cent (₦51.23bn) to ₦109.56bn from ₦160.79bn in January.

Despite this decline, the outstanding value of CPs increased MoM by 9.96 per cent (₦59.54bn) to ₦657.43bn, effectively offsetting the ₦50.02bn worth of CPs that matured during the period under review.

In the secondary market, trading activity on the FMDQ Exchange remained robust, with total turnover reaching ₦59.83trn in February 2025.

This marks a 4.89 per cent (₦2.79trn) MoM increase from January and a significant 48.41 per cent (₦19.52trn) year-on-year (YoY) surge from February 2024 levels.

Foreign Exchange and Money Market transactions continued to dominate secondary market activity, accounting for 69.14 per cent of the total turnover.

With the CBN maintaining its hawkish monetary stance, T-bills and other sovereign securities remain a focal point for investors seeking safe-haven assets in an inflationary environment.

As demand continues to rise, government securities are expected to play a crucial role in Nigeria’s financial landscape in the coming months.

ENDS

Demand For Fixed Income Securities Surges As FG Sells ₦1.44trn Treasury Bills is first published on The Whistler Newspaper