Kayode Tokede  

The Central Bank of Nigeria (CBN) successfully raised an estimated N8.99 trillion worth of Treasury bills (T-Bills) in seven months of 2025 amid growing investors’ appetite for naira assets and a hedge against double-digit inflation rate.

The N8.99 trillion raised in seven months of 2025, represents 4.1 per cent decline over N9.39 trillion raised in seven months of 2024.

T-Bills are typically issued by CBN to meet the government’s short-term financing needs and are considered a safe and low-risk investment.

The CBN in its “Government Securities” data, said it raised an estimated N13.3 trillion from T-Bills in 2024, about 99.7 per cent increase over N6.66 trillion raised in 2023.  

During the period under review, the total amount of T-bills allotted to investors accounted for about 36.47 per cent of the total subscriptions received at the 16 primary market auctions conducted in the seven months of the year.

The CBN offered a total amount of N7.17 trillion in the period under review, up by nearly 60 per cent from N4.48 trillion in the corresponding period of 2024.  

According to the CBN’s primary market data, out of the N24.68 trillion total subscription, a total of N15.68  trillion worth of bids submitted were rejected as the amount raised by the authority exceeded its target for seven months of 2025.

It was learnt that the CBN reduce interest rates during its T-bills auction in seven months of 2025 as investors push to partake.

For instance, stop rate on 91-day T-Bills auction in July 2025 stood at 15 per cent from 18 per cent from the first auction in January 2025, while the 182-day rate moved from 18.50 per cent in January  2025 to  15.50 per cent in July 2025.

Consequently, the rate on 364-day closed July 2025 at 15.88per cent as against 22.62 per cent January 2025.

The CBN has cut spot rates on T-bills  at the primary market auction in a bid to reduce its payment burden.

The apex bank has been scaling back on elevated discount rates offered on the T-bills due to strong demand and the fact that the benchmark interest rate has raced ahead of the country’s headline inflation that has seen decline in recent months. 

By tightening its monetary policy through higher interest rates and large NTBs auctions, the CBN aims to curb rising inflation and stabilise the foreign exchange rate, thereby fostering a more balanced economic environment. 

THISDAY observed that investors demand for long maturingNTBs continued to grow as its stop rate reached 20.32 per cent as of Feb 5, 2025, the highest so far this year.

The variation in stop rates across tenors also offers insight into investor sentiment regarding short-, medium-, and long-term economic outlooks.

While the lower stop rate on the 182-day bill suggests anticipation of stable interest rates, the higher stop rate on the 364-day T-Bills could imply a cautious stance towards potential future economic volatilities.

Investors’ diversified demand across the different maturities of T-Bills reflects strategic positioning for various investment horizons and signals a healthy trading environment in the Nigerian debt market.

The Mr. Olayemi Cardoso-led Monetary Policy Committee (MPC) of the CBN has jacked up the interest rate by 870 basis points to 27.50 per cent from 18.75 per cent at the start of the year to combat rising inflation, this has led to an equal increase in the yields of T-bills compared to last year.

The MPR at 27.50 per cent has played its role in the downward trend in inflation rate. Nigeria’s headline inflation rate has decreased for the fourth consecutive month to 21.88 per cent in July 2025, down from 22.22 per cent in June 2025 and 22.97 per cent recorded in May 2025. It was 23.71 per cent in April 2025, down from 24.23 per cent in the prior month.

Analysts attributes the low yield to demand and supply, stressing that the government deliberately cutdown T-Bill interest in response to various economic factors.

According to him, “The essence is to encourage foreign inflows that could help improve dollar liquidity in the foreign exchange market and cause a moderation in Naira exchange rate until the market attains equilibrium level.

“I have no doubt that this is the most appropriate decision on the part of CBN and the government at this time. There’s a need to improve dollar liquidity that will eventually force domestic interest rates to moderate subsequently.

“The low interest rate will filter into the equity market to temporarily moderate the bullish sentiments in that market as well. The financial system has high liquidity, enabling the CBN to cut interest rates while maintaining investors interest.”

He added that by lowering interest rate on T-Bills, the CBN aims to reduce its payment burden on government securities, especially with the benchmark interest rate rising above headline inflation.  

On T-Bills yield for 2025, analysts at Cordros Research in a report titled, “Nigeria in 2025. Reform to Recovery: Navigating the Rebound,” said,  “Given our expectations of a pause in monetary policy rate hikes and a moderate pace of borrowings in 2025, we expect yields to pare, particularly towards the  second half of the year, after a further increase in Q1-2025.

“Specifically, we expect the onset of the disinflationary process in Q1-2025 and the pause in rate hikes, which should begin in March, to influence market sentiments. Additionally, while we expect the demand-supply imbalance to persist, the slower borrowing pace could cause yields to temper.

“Considering all the factors, we expect yields to decline and settle at c.18.5 per cent and c.18per cent on Treasury bills and bonds by 2025 year-end, reflecting our expectations of successful policy pass-throughs.”

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