The Central Bank of Nigeria (CBN) has lowered the stop rate on its one-year Treasury Bills after an overwhelming wave of investor demand pushed subscriptions to nearly seven times the amount offered at its latest primary market auction.
At the auction conducted on Wednesday, the apex bank offered N500 billion worth of 364-day Treasury Bills but received subscriptions of about N3.38 trillion, underscoring a strong appetite for government securities despite declining yields.
The one-year stop rate fell by 31 basis points to 17.35 per cent from the previous auction’s level, while rates on the 91-day and 182-day instruments were left unchanged, reflecting the CBN’s confidence in robust market liquidity and sustained investor demand.
Analysts say the massive oversubscription signals that institutional investors continue to favour risk-free government debt amid abundant liquidity in the financial system. The aggressive demand also gave the CBN room to reduce borrowing costs without struggling to attract investors.
The development comes as investors increasingly channel funds into fixed-income assets, driven by expectations that yields may continue to moderate if liquidity conditions remain strong and inflation maintains its recent easing trend.
Market observers note that lower Treasury Bill yields could gradually encourage some investors to rebalance their portfolios toward equities and other higher-yielding assets if returns on government securities continue to decline.
The latest auction outcome reinforces the CBN’s ability to manage domestic borrowing costs while maintaining strong investor participation in the Treasury Bills market, even as it continues efforts to sustain monetary stability and liquidity management.
