The Central Bank of Nigeria (CBN), on behalf of the Debt Management Office (DMO), has reported a massive 283.42% oversubscription, securing N1.47 trillion in bids for the 364-day Treasury Bills auction held on January 8, 2025.
The CBN had announced plans to issue Treasury Bills with tenors of 91, 182, and 364 days. They offered N50 billion for the 91-day bills, N80 billion for the 182-day bills, and N385 billion for the 364-day bills. The subscription results were staggering, with N22.94 billion for the 91-day bills, N20.81 billion for the 182-day bills, and a record N1.47 trillion for the 364-day bills.
Bids for the 364-day Treasury Bills ranged from 22% to 28%, with the stop-out rate set at 22.62%. This surge in demand for the longer-term securities highlights the impact of rising interest rates.
The demand for Treasury Bills has surged amid rising interest rates. This follows the CBN’s recent increase in the Monetary Policy Rate (MPR) from 27.25% to 27.50%, with inflation reaching 33.88% in November 2024. Investors are turning to high-yield government instruments, such as Treasury Bills, as a hedge against inflation.
The rise in demand for the 364-day bills marked an increase of 2,723% compared to previous auctions, reflecting the growing appeal of longer-term investments in a high-rate environment. Conversely, demand for the 182-day bills dropped by 77.9%.
91-day Bills: N22.94 billion in bids (Stop-out rate: 18%)
182-day Bills: N20.81 billion in bids (Stop-out rate: 18.5%)
364-day Bills: N1.47 trillion in bids (Stop-out rate: 22.62%)
91-day bills: April 10, 2025
182-day bills: July 10, 2025
364-day bills: January 8, 2026
The allocation date for all three Treasury Bills is January 9, 2025, with a significant portion of the funds earmarked for the 364-day bills.Treasury Bills are sold at a discount, with investors receiving returns upon maturity. When interest rates rise, newer T-bills with higher rates become more attractive, driving demand for longer-term securities like the 364-day bills.