By Chinwendu Obienyi
The Central Bank of Nigeria (CBN) successfully has raised N2.93 trillion from recent auctions of Treasury Bills (T-Bills) and Open Market Operation (OMO) bills, buoyed by strong investor demand across both instruments.
T-Bills are short-term government securities and are issued by a country’s central bank, like the CBN, to raise money for the government while OMO bills are very similar to T-bills, but they are issued specifically to control money supply and liquidity in the economy.
Daily Sun gathered that the apex bank at the Nigerian Treasury Bills (NTB) auction conducted midweek, offered instruments worth N400 billion across three maturities — 91 days, 182 days, and 364 days.
However, investor appetite was significantly higher, with total subscriptions reaching N1.54 trillion, resulting in a bid-to-offer ratio of 3.9 times.
In response to the robust demand, the CBN over-allotted a total of N714.38 billion, with the bulk of the allocation — N650.28 billion — channeled into the longer 364-day paper. Stop rates declined across all tenors, reflecting the strong market interest.
Similarly, at the OMO auction held on April 25, the CBN offered instruments worth N500 billion across two tenors — 298 days and 319 days. The auction attracted subscriptions totaling N1.39 trillion, translating to a bid-to-offer ratio of 2.8 times. The central bank ultimately allotted N1.01 trillion to investors, once again demonstrating the market’s appetite for high-yield, short-term government securities.
Altogether, the CBN raised N2.93 trillion through the combined NTB and OMO auctions within the week, underscoring the resilience of investor demand despite tightening global financial conditions and local liquidity considerations.
Commenting on the auctions, a Lagos-based fixed income analyst said, “The demand we are seeing is driven by excess liquidity in the banking system, coupled with a risk-averse investment stance among institutional investors. Even though the real returns are still negative when adjusted for inflation, the nominal yields remain attractive compared to other instruments.”
Looking ahead, analysts anticipate a potential moderation in demand for short-term instruments as system liquidity is expected to tighten, which could place upward pressure on yields in subsequent auctions.
Furthermore, with the Monetary Policy Committee (MPC) of the CBN maintaining a hawkish posture to rein in inflationary pressures, short-term yields may experience a mild uptick as investors adjust their expectations.
However, some market participants believe that the resilient demand trend could persist if the CBN continues to manage liquidity in a way that favors relatively stable rates
Meanwhile, the CBN’s continued active participation in the short-term debt market is seen as crucial not only for financing government obligations but also for controlling inflationary pressures and stabilizing the naira in the foreign exchange market.
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