The Central Bank of Nigeria (CBN) increased the discount rate on 364-day Nigerian Treasury Bills (NTB) to 17.59% at its midweek primary market auction, responding to persistent investor appetite for long-duration sovereign assets. Conducted by the Debt Management Office (DMO) on behalf of the central bank, the auction attracted massive oversubscription as institutional investors sought to lock in high fixed-income yields.
Auction Summary & Subscription Breakdown
The DMO offered N700 billion across standard maturities, comprising N100 billion for 91-day bills, N100 billion for 182-day papers, and N500 billion for 364-day instruments. Driven by strong liquidity, total investor subscriptions surged past N4.414 trillion, representing an overall bid-to-offer ratio of 6.3x. In response, the DMO expanded total allotments to N1.46 trillion across all tenors—equating to approximately 33% of aggregate demand.
Tenor-by-Tenor Allotment and Spot Rates
- 91-Day Bills: Total allotments reached N148.57 billion at an unchanged spot rate of 16.30%. Investor demand for the short-term paper printed at N162.21 billion, exceeding the initial N100 billion offer.
- 182-Day Bills: Allocated N47.48 billion to investors at a stable spot rate of 16.50%. Subscriptions for the mid-tenor instrument reached N63.97 billion, coming below the N100 billion target.
- 364-Day Bills: Recorded overwhelming demand totaling over N4.188 trillion. The CBN allotted N1.26 trillion at a stop rate of 17.59%, reflecting a 24-basis-point increase over previous levels.
Market Outlook and Liquidity Dynamics
The auction results highlight a pronounced structural preference among asset managers and commercial banks for one-year papers, which accounted for the vast majority of total sales and subscriptions. While short and medium-term yields remained anchored, the apex bank's upward adjustment on the long end aligns with its broader policy objectives to mop up excess system liquidity, contain inflationary pressures, and maintain foreign portfolio interest.
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