Kayode Tokede

In a bid to amid stabilise liquidity and manage inflationary pressures within the economy, the Central Bank of Nigeria (CBN), mopped up an estimated N11.43 trillion through the Nigerian Treasury Bills (NTBs) in 10-month of 2025. This is about 4.01 per cent increase over N10.99 trillion mopped up in 10-month of 2024, according to the CBN ‘Primary Market’ data.

The CBN success with the N11.43 trillion NTB was fuelled by investors’ demand for risk-free instruments to hedge against double-digit inflation.

NTB is a short-term debt instrument issued by a government at the primary market to raise funds and manage liquidity in the economy. It is considered one of the safest investments because it is backed by the government.

In the period under review, the CBN offered to raise N9.3 trillion, about 50.3 per cent increase over N6.19trillion offered in the corresponding period of 2024.

Total subscription stood at N30.2 trillion, about 9.8 per cent drop from N33.45 trillion total subscription reported by the CBN in 10-month of 2024.

CBN numbers revealed that the spot rates on 91-Day NTB dropped to 15.3 per cent as of October 2025 auction from 17 per cent October 2024.

As rate on 182-Day moved from 17.5 per cent October 2024 to 15.5 per cent as of October 2025, the rate on 364-Day NTB closed October 2025 at 16.14 per cent from 20.65 per cent October 2024.

The apex bank has been scaling back on elevated discount rates offered on the NTB 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 NTB auctions, the CBN aims to curb rising inflation and stabilise the foreign exchange rate, thereby fostering a more balanced economic environment.

This has reflected in the dwindling inflation rate, currently at 18.02 per cent as of September 2025, to mark a decrease from previous months. This is the lowest rate recorded since July 2022, attributed to factors such as foreign exchange stability and seasonal harvests.  

THISDAY observed that investors demand for long maturities NTBs 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 NTB bill suggests anticipation of stable interest rates, the higher stop rate on the 364-day NTB could imply a cautious stance towards potential future economic volatilities.

Investors’ diversified demand across the different maturities of NTB reflects strategic positioning for various investment horizons and signals a healthy trading environment in the Nigerian debt market.

For instance, rate on 91-day NTB auction rate in December 2024 stood at 18 per cent from 7 per cent in December 2023, while 182-day moved from 10 per cent in December 2023 to 18.5per cent in December 2024.

The Monetary Policy Committee (MPC) of the CBN had cut down the interest rate to 27 per cent from 27.50 per cent as the inflation rate in Nigeria has seen downward movement in recent months.

Analysts at Cordros Research in a report titled, ‘Nigeria in 2025. Reform to Recovery: Navigating the Rebound’, stated that the domestic fixed income market remained characteristically volatile in 2025, driven by several factors such as the tight monetary policy stance by the MPC to tether soaring inflation, the repricing of instruments to attract FPIs and improve the real return profile for local investors,  the demand and supply imbalance given the government’s large financing needs, and  the tight liquidity in the financial system.

They noted that borrowings in the domestic market surged this year, partly due to the federal government’s refinancing of the CBN’s Ways & Means despite a lower-than-budgeted deficit.

On the implication of the 27 per cent MPR cut on fixed income  instrument, they said,  “We expect the ease in monetary conditions and dovish policy guidance to anchor a broad-based moderation in yields across the fixed income curve.

“At the short end, OMO and NTB yields are expected to pare as improved liquidity fuels strong demand for short-dated instruments, flattening the curve in the near term. In the bond market, mid-tenor papers are expected to benefit the most from stronger demand, driving faster yield compression relative to the long end, where elevated fiscal borrowing requirements may temper declines.

“Meanwhile, lower sovereign benchmarks will cascade into the corporate debt space, reducing borrowing costs and supporting refinancing activity, even as credit risk premia keep spreads differentiated across issuers. Collectively, these dynamics point to a bull phase in fixed income, characterised by stronger duration demand, more active corporate issuance, and a recalibration of yield expectations across all market segments.”

On 2025 yield, they stated, “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.”