The Central Bank of Nigeria (CBN) has recorded a significant rise in investor interest at its most recent treasury bills auction, with total bids hitting N1.21 trillion, despite slightly reducing the offer to N500 billion. The auction, which was held on May 21, 2025, reflects continued strong appetite for government securities even as inflation remains high and interest rates steady.
According to official data from the auction, the CBN offered N500 billion worth of treasury bills, down slightly from the N503 billion offered at the previous auction. However, subscriptions surged to N1.21 trillion, up from N1.09 trillion recorded earlier. The strong demand was driven mostly by the 364-day treasury bill, which alone received bids worth N1.05 trillion, far above its N350 billion offer.
In total, the CBN allotted N615.81 billion worth of treasury bills, exceeding the N579 billion allotted at the prior auction. The stop rates for the 91-day and 180-day bills were unchanged at 18.00% and 18.50%, respectively. However, the stop rate for the 364-day bill dropped slightly to 19.56% from 19.63% in the previous round.
A report from Meristem Securities explained the increase in demand as a result of improved system liquidity and investor preference for longer-term securities with attractive yields. “The increase in subscription at the CBN’s treasury bills auction reflects improved system liquidity and a growing investor appetite for longer-dated instruments. Investors are showing confidence in the government’s debt market as yields remain attractive amid evolving macroeconomic conditions,” the report stated.
In a related move, the Debt Management Office (DMO) also held an Open Market Operation (OMO) auction last week, offering N500 billion across 182-day and 210-day tenors. The auction recorded a total subscription of N743.25 billion, with N172.5 billion for the 182-day bill and N570.75 billion for the 210-day bill. The DMO eventually allotted N804.34 billion, with stop rates of 23.77% for the 182-day and 23.98% for the 210-day bills.
Meristem’s analysts noted that the high subscription at the OMO auction reflects investors’ ongoing search for yield in a high-interest-rate environment, despite inflation and fiscal concerns. “The strong subscription at the DMO’s OMO auction underscores investors’ search for yield in a relatively high-interest rate environment, despite concerns over inflation and fiscal pressures,” the analysts added.
Meanwhile, activity in the secondary treasury bills market turned bearish, reversing the bullish sentiment seen the previous week. Average yields in the market rose slightly by four basis points to 20.88% from 20.84%. The short end of the yield curve saw the highest movement, climbing by 69 basis points due to sell-offs in 97-day, 69-day, and 27-day bills. The mid-segment also rose by eight basis points, mostly from sell-offs in the 125-day bill. In contrast, long-dated bills saw yields drop by 33 basis points, particularly in the 293-day, 300-day, and 356-day maturities.
On the local bond front, market activity remained low but positive, with average yields falling by three basis points to 18.99% from 19.03%. The short end of the curve led the gains, dropping by 69 basis points as traders showed strong buying interest in January 2026 and March 2026 maturities. The mid-segment also saw yield declines of 27 basis points, driven by increased demand for May 2033, July 2030, and February 2031 bonds. However, the long end of the curve inched up by four basis points due to sell-offs in April 2037 bonds.
The Eurobond market maintained its upward momentum as well, with average yields falling by two basis points to 9.76% from 9.79%. The decline was most evident in long-term maturities, especially bonds maturing in November 2047, January 2049, and September 2051.
Meristem analysts believe the positive performance in the Eurobond market reflects increased investor confidence in Nigeria’s external debt situation and a gradual easing of global risk factors. “The Eurobond market’s continued bullish performance reflects growing investor optimism on Nigeria’s external debt profile and the gradual easing of global risk factors,” they said.
Financial analysts interpret the current mixed trends across treasury bills, OMO instruments, and bonds as investors adjusting their portfolios in response to macroeconomic developments. However, they remain optimistic about the future of Nigeria’s debt instruments, citing attractive yields and an improving liquidity environment.
