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The Debt Management Office (DMO) recorded robust investor demand at Wednesday’s Nigerian Treasury Bills (NTB) primary market auction, with subscriptions remaining more than five times the amount offered.
According to the results of the auction, the DMO offered N600 billion across the 91-day, 182-day and 364-day tenors.
However, total subscriptions surged to N3.03 trillion, translating to a bid-to-offer ratio of 5.1 times underscoring the strong interest from banks, pension fund managers, asset managers and other institutional investors seeking relatively risk-free investment opportunities.
Riding on the robust demand, the DMO allotted N1.19 trillion, nearly double the initial offer size, resulting in a bid-to-cover ratio of 2.5 times. The larger allotment reflects the government’s continued strategy of taking advantage of favourable market conditions to meet its short-term funding requirements while satisfying investor demand.
Auction results showed mixed movements in stop rates across the three maturities. The stop rate on the benchmark 364-day bill declined by 4 basis points to 17.66 per cent from 17.70 per cent at the previous auction, indicating investors were willing to accept slightly lower yields in exchange for locking in longer-term returns.
Meanwhile, stop rates on the 91-day and 182-day instruments were unchanged at 16.30 per cent and 16.50 per cent, respectively, suggesting that pricing at the shorter end of the curve remains relatively stable despite strong demand.
Experts said the outcome reflects the abundance of liquidity in the financial system following recent inflows from maturing securities and coupon payments, which have continued to support aggressive bidding at primary market auctions.
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They noted that institutional investors are also maintaining strong allocations to Treasury Bills as they balance portfolio risk while awaiting clearer signals on the direction of monetary policy and inflation in the second half of the year.
The slight moderation in the one-year stop rate also points to improving investor confidence that interest rates may have peaked, particularly as inflationary pressures continue to ease gradually and the Central Bank of Nigeria (CBN) maintains a cautious but supportive monetary policy stance.
Market participants said treasury Bills remain attractive despite the modest decline in yields, given their relatively low risk profile compared with other investment instruments. The securities also continue to provide competitive real returns for investors seeking liquidity and capital preservation in an uncertain macroeconomic environment.
The strong subscription level further reinforces expectations that demand for government securities will remain resilient in the near term, supported by healthy banking system liquidity, limited supply of alternative fixed-income assets and continued participation by institutional investors.
Looking ahead, analysts expect yields to remain broadly stable in the coming auctions, although the pace of any further decline will likely depend on liquidity conditions, inflation trends and the CBN’s monetary policy decisions.
They added that the DMO may continue to increase allotments at future auctions if demand remains elevated, allowing the government to efficiently finance its short-term borrowing programme while keeping funding costs under control.
