Treasury Bills: CBN Announces N400b Offering for Midweek Auction
The Central Bank of Nigeria (CBN) has scheduled a new Treasury Bills auction for midweek, with offerings totalling N400 billion.
This represents a significant reduction from recent auction volumes, amounting to only half the size of the previous offering.
Earlier this month, the CBN conducted its first April auction with an offering of N800 billion, up from the N700 billion issued in March. Despite the larger volume, investor appetite showed signs of cooling, with total subscriptions falling by 21.23% to N1.13 trillion, compared to March’s N1.43 trillion.
The decline in investor interest led to actual allotments of just N424.58 billion at the last auction—the lowest allocation recorded since December 2024. Financial analysts note that the softer demand, combined with heightened rate expectations, prompted the CBN to raise rates on shorter-term instruments.
Specifically, yields on the 91-day bills rose to 18.50% from 18.00%, while the 182-day instruments increased to 19.50% from 18.50%. The 364-day rate remained unchanged at 19.63%. Meanwhile, the secondary fixed-income market continues to exhibit bearish sentiment, with widespread selling pressure affecting both bonds and Treasury bills.
“While Q1 2025 was generally characterised by declining rates on new fixed-income issuance, driven by improving macroeconomic conditions, March presented a notable deviation.
“The yield curve shifted upward in response to persistent system liquidity constraints and continuous debt supply, partially reversing the gains of the preceding month.
“This divergence aligns with our earlier outlook for H1 2025, which anticipated a bearish bias and bear flattening, driven by elevated government borrowing needs and tight monetary conditions,” Meristem Securities Limited stated in an update.
The apex bank intensified its Treasury Bills operations in Q1 2025, conducting eight auctions compared to seven in the previous quarter. This increase resulted from an additional auction in March, bringing that month’s total to four versus the typical three in the end-of-quarter schedule.
This expanded auction calendar likely reflects the government’s growing borrowing requirements and an effort to capitalize on strong investor interest amid favorable borrowing rates.
During Q1 2025, the CBN issued T-bills worth N5.54 trillion, representing a 37.88% increase from Q4 2024, though slightly below the volume recorded in the comparable period of 2024 (a 0.17% decrease).
Interest rates on the instruments showed notable patterns throughout the quarter. The 91-day and 182-day bills maintained consistent rates of 18.00% and 18.50%, respectively, from January through February.
In early March, a temporary downward adjustment occurred, with rates falling to 17.00% for 91-day bills and 17.75% for 182-day instruments. This brief decline was supported by robust investor demand and market expectations of a broader rate reduction.
However, the downward trend proved short-lived. By mid-March, while the 91-day rate held steady, the 182-day instrument edged up by 2 basis points to 17.79%, reflecting weakening demand amid tightening liquidity conditions.
At the third March auction, rates returned to their previous levels—18.00% and 18.50% for the 91-day and 182-day bills, respectively—where they remained through the end of the quarter.