By NIyi JACOBS
he Central Bank of Nigeria (CBN) and the Debt Management Office (DMO) appear at odds over Treasury Bill rates, as the stop rate on the 364-day instrument fell to 17.82%—its lowest level in six months—despite strong investor demand.
At the March 5 auction, the Federal Government sought to raise ₦650 billion but ended up allotting ₦830.44 billion, following a surge in subscriptions totaling ₦1.92 trillion. The bulk of investor interest was in the 364-day bill, which accounted for 94% of bids.
Despite the high demand, the drop in yields reflects the ongoing tussle between the CBN, which favors higher rates to attract foreign investors and support the naira, and the DMO, which argues that rising yields inflate debt servicing costs. The government’s approach to refinancing maturing debts has also contributed to the oversubscription, as investors reinvest refunded funds into fresh auctions.
The evolving monetary policy landscape further complicates the outlook for yields. With Nigeria’s inflation rebasing leading to a reported drop in headline inflation, analysts remain uncertain about the CBN’s next moves. While foreign investors push for higher returns, the DMO’s preference for lower borrowing costs suggests that rates could remain capped in the near term.
