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By Chinwendu Obienyi
Investors submitted bids worth N2.34 trillion at the latest Nigerian Treasury Bills (NTB) primary market auction conducted by the Debt Management Office (DMO), more than double the N1.05 trillion initially offered, underscoring sustained appetite for government securities despite shifting monetary policy signals.
Auction results showed that total subscription translated to a bid-to-offer ratio of 2.2 times, reflecting strong investor demand as market participants rushed to secure relatively attractive yields following the recent shift toward monetary easing by the Central Bank of Nigeria (CBN).
Out of the total bids received, the DMO allotted N1.01 trillion across the three tenors offered at the auction, 91-day, 182-day and 364-day bills, resulting in a bid-to-cover ratio of 2.3 times.
Demand was particularly pronounced at the longer end of the curve as investors continued to favour instruments that lock in yields for a longer period. This dynamic played a key role in shaping stop rates at the auction.
The stop rate for the 91-day tenor rose by 15 basis points to 15.95 per cent, while the 364-day tenor saw a sharper increase of 83 basis points to settle at 16.73 per cent. In contrast, the 182-day tenor remained unchanged at 16.65 percent.
Market analysts say the outcome reflects an ongoing tension between the central bank’s dovish policy tone and investors’ demand for higher compensation, especially for longer-dated naira assets.
\In a recent market briefing, analysts at Meristem Securities noted that yields at the longer end of the NTB curve may continue to face upward pressure despite signals of policy easing.
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According to the firm, authorities may deliberately maintain relatively attractive stop rates to sustain investor participation in the government securities market, particularly as alternative fixed-income opportunities remain competitive.
We see some upward bias at the long end, as authorities may look to offer attractive levels to sustain investor participation, particularly with the one-year bill currently trading around 16 percent in the secondary market,” Meristem stated in its report.
This dynamic was evident at the latest auction, where the 364-day stop rate resisted downward pressure despite expectations that monetary easing could lead to softer yields.
Analysts note that investors remain cautious about committing funds to longer-dated naira instruments without a sufficient premium, especially amid persistent inflationary pressures and uncertainty surrounding the interest-rate trajectory.
The strong subscription level also reflects continued liquidity in the financial system, with institutional investors, including banks and asset managers, actively positioning ahead of potential shifts in the yield environment.
For the government, robust demand at the auction provides reassurance that domestic investors remain willing to fund fiscal needs through the local debt market, even as authorities balance the objectives of lowering borrowing costs and maintaining investor confidence.
Looking ahead, analysts expect investor interest in NTB auctions to remain strong in the near term as market participants seek to lock in yields before any meaningful decline materialises in response to the central bank’s evolving monetary stance.
