Investors pour N2.87trn into 364-day T-bills as short-term paper ignored
At Tuesday's primary market auction, institutions bid N2.872 trillion for the 364-day Treasury Bills against just N400 billion on offer—oversubscribed 7.18 times. Meanwhile, 91-day and 182-day bills attracted only 0.95x and 0.68x of their offers respectively. CBN allotted N1.191 trillion total, with N1.062 trillion going to the one-year instrument.
The 364-day stop rate settled at 17.66%—down 4 basis points from last week. This offers roughly 175 basis points real return above June's 15.91% inflation, making it the most attractive yield available. The severe undersubscription of short-term paper suggests investors find 16.30%-16.50% inadequate compensation given 17.52% food inflation.
This was July's second T-bill auction. A third one scheduled for July 29 will offer N700 billion, making this month's net withdrawal N1.352 trillion against maturing bills—a major liquidity drain. Analysts at Cowry Asset Management see this as signaling a potential first CBN rate cut at September's MPC meeting.
With yields potentially peaking above 17% on the one-year instrument, fixed-income investors face a timing decision: lock in current rates or wait for possible cuts. The real return differential versus inflation also raises questions about where else Nigerians might find positive real yields in today's market.