CBN Sells ₦7.9 Trillion T-Bills, Rejects ₦12.24 Trillion Bids in Just 5 Months
Nigeria’s fixed income market is heating up as investor demand for Treasury Bills (T-Bills) surges in early 2025. Driven by double-digit inflation and attractive yields, the Central Bank of Nigeria (CBN) sold a whopping ₦7.9 trillion worth of T-Bills between January and May. However, it also rejected bids worth ₦12.24 trillion, underscoring the aggressive appetite for naira assets.
Key Highlights
In total, investors subscribed to T-Bills worth ₦20.13 trillion across 12 auctions conducted by the Debt Management Office (DMO) on behalf of the CBN. Out of this amount, only ₦7.9 trillion was sold, while ₦12.24 trillion was turned down. Interestingly, the CBN had initially planned to offer just ₦6.02 trillion, but strong demand pushed allotments well above target.
Interest Rates on the Rise
In a bid to lure investors and battle inflation, the CBN raised interest rates across various bill tenors. For example, the stop rate for the 91-day bill moved from 16.5% in May 2024 to 18.5% in May 2025. Similarly, the 182-day bill saw an increase from 17.45% to 18.5% over the same period. However, the stop rate for the 364-day bill slightly dipped from 20.69% in May 2024 to 19.50% in May 2025.
Notably, February 2025 recorded the highest stop rate so far this year—20.32%—especially for long-dated bills, signaling investor caution about Nigeria’s medium to long-term economic outlook.
Why the Surge in Demand?
Many investors are hedging against inflation by turning to T-Bills, which are seen as a safe and low-risk option in an uncertain environment. The rising yields, combined with CBN’s tighter monetary stance, have made T-Bills even more attractive as a short-term parking space for capital.
Analyst Insights
Cordros Research expects yields to begin declining by the second half of the year, settling around 18.5% by year-end. They anticipate that the disinflationary process starting in Q1 2025, along with a pause in interest rate hikes, will shift market sentiment and temper yields.
On the other hand, investment banker and stockbroker Tajudeen Olayinka believes the government deliberately ramped up NTB supply to drive stop rates above 20%. He noted that some institutional investors might also have withheld bids, creating room for higher returns. According to him, the strategy is aimed at attracting foreign inflows to improve dollar liquidity and support the naira.
He stated, “This is the most appropriate decision on the part of the CBN and the government. There’s a need to improve dollar liquidity that will eventually force domestic interest rates to moderate. The higher interest rate will likely filter into the equity market to temporarily moderate bullish sentiments.”
Monetary Policy in Action
Since the beginning of 2025, the Monetary Policy Committee (MPC) led by Olayemi Cardoso has raised the interest rate significantly—from 18.75% to 27.50%—an increase of 870 basis points. This tightening stance is meant to curb inflation, steady the naira, and restore investor confidence.
Implications
Bond yields are expected to soften later in the year as government borrowing slows. Meanwhile, rising yields in the fixed income space could draw capital away from equities, temporarily cooling bullish market sentiment. Improved foreign inflows might also help stabilise the naira exchange rate. Overall, investor demand across both short and long tenors reflects a cautious but strategic positioning in response to Nigeria’s evolving economic landscape.
Bottom Line
With interest rates elevated and demand for T-Bills showing no signs of slowing, CBN’s aggressive policy stance is clearly reshaping Nigeria’s debt market. If current trends continue, 2025 could become a defining year for fixed income investors—one marked by resilience, rising yields, and renewed confidence in the naira.
Nigeria’s fixed income market is heating up as investor demand for Treasury Bills (T-Bills) surges in early 2025. Driven by double-digit inflation and attractive yields, the Central Bank of Nigeria (CBN) sold a whopping ₦7.9 trillion worth of T-Bills between January and May. However, it also rejected bids worth ₦12.24 trillion, underscoring the aggressive appetite for naira assets.
Key Highlights
In total, investors subscribed to T-Bills worth ₦20.13 trillion across 12 auctions conducted by the Debt Management Office (DMO) on behalf of the CBN. Out of this amount, only ₦7.9 trillion was sold, while ₦12.24 trillion was turned down. Interestingly, the CBN had initially planned to offer just ₦6.02 trillion, but strong demand pushed allotments well above target.
Interest Rates on the Rise
In a bid to lure investors and battle inflation, the CBN raised interest rates across various bill tenors. For example, the stop rate for the 91-day bill moved from 16.5% in May 2024 to 18.5% in May 2025. Similarly, the 182-day bill saw an increase from 17.45% to 18.5% over the same period. However, the stop rate for the 364-day bill slightly dipped from 20.69% in May 2024 to 19.50% in May 2025.
Notably, February 2025 recorded the highest stop rate so far this year—20.32%—especially for long-dated bills, signaling investor caution about Nigeria’s medium to long-term economic outlook.
Why the Surge in Demand?
Many investors are hedging against inflation by turning to T-Bills, which are seen as a safe and low-risk option in an uncertain environment. The rising yields, combined with CBN’s tighter monetary stance, have made T-Bills even more attractive as a short-term parking space for capital.
Analyst Insights
Cordros Research expects yields to begin declining by the second half of the year, settling around 18.5% by year-end. They anticipate that the disinflationary process starting in Q1 2025, along with a pause in interest rate hikes, will shift market sentiment and temper yields.
On the other hand, investment banker and stockbroker Tajudeen Olayinka believes the government deliberately ramped up NTB supply to drive stop rates above 20%. He noted that some institutional investors might also have withheld bids, creating room for higher returns. According to him, the strategy is aimed at attracting foreign inflows to improve dollar liquidity and support the naira.
He stated, “This is the most appropriate decision on the part of the CBN and the government. There’s a need to improve dollar liquidity that will eventually force domestic interest rates to moderate. The higher interest rate will likely filter into the equity market to temporarily moderate bullish sentiments.”
Monetary Policy in Action
Since the beginning of 2025, the Monetary Policy Committee (MPC) led by Olayemi Cardoso has raised the interest rate significantly—from 18.75% to 27.50%—an increase of 870 basis points. This tightening stance is meant to curb inflation, steady the naira, and restore investor confidence.
Implications
Bond yields are expected to soften later in the year as government borrowing slows. Meanwhile, rising yields in the fixed income space could draw capital away from equities, temporarily cooling bullish market sentiment. Improved foreign inflows might also help stabilise the naira exchange rate. Overall, investor demand across both short and long tenors reflects a cautious but strategic positioning in response to Nigeria’s evolving economic landscape.
Bottom Line
With interest rates elevated and demand for T-Bills showing no signs of slowing, CBN’s aggressive policy stance is clearly reshaping Nigeria’s debt market. If current trends continue, 2025 could become a defining year for fixed income investors—one marked by resilience, rising yields, and renewed confidence in the naira.