The discount rate on Nigerian Treasury bills dropped during the most recent primary market auction held by the Debt Management Office (DMO) for the Central Bank of Nigeria (CBN), reflecting a surge in demand on Wednesday.
The one-year (364-day) Treasury note attracted a lot of interest during the auction, but bids for shorter tenors, such as the 91-day and 182-day bills, were quiet. Investors looking for risk-free securities were first provided ₦583.25 billion in normal maturities by the DMO.
Investor appetite for naira-denominated assets was evident in the auction results, with total subscriptions reaching an impressive ₦2.55 trillion. This included bids for the 91-day, 182-day, and 364-day bills.
A breakdown of the auction revealed that 99% of the total subscriptions were directed toward the 364-day bill, which recorded a bid-to-cover ratio of 4.37x—more than double the 1.93x ratio observed at the previous auction.
In response to this strong demand, the DMO allocated ₦756.70 billion across the three maturities, significantly exceeding the initial offer of ₦538.25 billion. Of this amount, the 364-day bill accounted for a substantial 98% of the total allotment.
The stop rate for the 364-day paper dropped by 57 basis points, decreasing from 23.50% at the prior auction to 22.97%, signaling a decline in yields.
Exchange Rates Unchanged for Short and Mid-Tenor Bills
As the auction came to a close, the stop rates for the shorter tenors—the 91-day and 182-day bills—stayed the same, indicating no shift in rates.
