Investors seeking high-yield havens in Nigeria’s fixed-income market received a shot of optimism on Wednesday, as the latest Treasury Bills (T-bills) auction proved that higher-for-longer remains the market participants’ expectations, despite the Central Bank of Nigeria’s (CBN) recent pivot to monetary easing.
The first auction since the Monetary Policy Committee (MPC) cut the benchmark interest rate to 26.5 percent signalled compression in yields across markets was closing in. Total subscriptions for the 364-day paper alone crossed the N2 trillion mark, as investors bet that fiscal liquidity needs will keep rates elevated in the first half of 2026.
Analysts at Meristem Securities highlighted this tension between policy easing and market reality in its recent report.
“We see some upward bias at the long end, as authorities may look to offer attractive levels to sustain investor participation, particularly with the 1-year bill currently trading around 16 percent in the secondary market,” the firm noted in its latest briefing.
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This bias was evident as the 364-day stop rate refused to cave to the MPC’s dovish signal, instead reflecting a market that still demands a significant premium for long-term naira commitments.
Ayodeji Ebo, Managing Director of Optimus by Afrinvest, observed that the massive N2 trillion-plus demand for the one-year paper shows investors are moving quickly to secure these rates while they are still available at these levels.
“Demand remained strongest for the 364-day bill as investors continue to lock in higher yields at the long end of the curve,” Ebo said. He noted that the uptick in stop rates actually reflects a sophisticated market expectation: that inflation and liquidity management will keep rates from crashing anytime soon.
“The increase in the stop rate on the 364-day bill also reflects the market’s expectation that interest rates may remain elevated in the near term, making longer-tenor Treasury Bills attractive for investors seeking relatively risk-free returns,” he added.
The Nigerian debt capital market saw continued investor appetite on Wednesday as total subscriptions for Treasury Bills (T-bills) surged to N2.34 trillion, signalling a rush to lock in attractive returns following the Central Bank’s recent pivot toward monetary easing.
The auction saw the CBN allot a total of N1.01 trillion across the 91-day, 182-day, and 364-day tenors.
Market analysts say the massive demand, which represented an oversubscription of over 120 percent against the N1.05 trillion offered, reflects a flight to safety and a move by institutional players to secure high yields before the easing cycle fully compresses market rates.
Read also: T-bills, bonds offer final yield play as rate cuts loom
As usual, demand was heavily skewed toward the one-year (364-day) paper. The long-tenor bill attracted N2.12 trillion in bids, nearly 90 percent of the total subscription, against an offer of N800 billion.
The CBN eventually allotted N856.03billion for the 364-day bill, with the stop rate settling at 16.73 percent. The stop rate rose above February levels, and the effective yield of 20.09 percent remains robust for domestic pension funds and asset managers.
Conversely, the shorter ends of the curve saw more moderate participation.
The 91-day tenor offered at N100 billion received subscriptions of N80.92 billion. The CBN allotted N64.26 billion at a stop rate of 15.95percent.
While the 182-Day Tenor offered at N150 billion saw bids totalling N136..5 billion. Allotments stood at N91.43billion with a stop rate of 16.65 percent.